If you haven’t done so lately, now would be a good time to re-assess your global antitrust risks. Not only are U.S. regulators cracking down with record fines, but many other countries are becoming increasingly active in the antitrust area as well.

In particular, antitrust enforcement is rising in some of the most desirable markets for overseas expansion, including China, India, Brazil, and Mexico. “The antitrust world is becoming increasingly smaller,” says Tom Sager, former general counsel of chemical giant DuPont and now a partner with law firm Ballard Sphar.

Although all antitrust laws prohibit price-fixing and cartels, they differ substantively on other questionable activities: price discrimination, mergers, joint ventures, monopolies, and more. Even better, the rule of law in these countries is not always as clear or well-defined as antitrust law in the United States. That makes forecasting antitrust risks all the more difficult.

“What you might interpret as not a problem, because your share of the market might be quite small or your interaction with a competitor might be non-existent, may be viewed through a different eye from any number of regulators,” Sager says.

The globalization of antitrust enforcement comes at a time when U.S. regulators continue their own aggressive pursuit of violations. The Antitrust Division of the Justice Department, for example, collected $1.86 billion in criminal fines and penalties in fiscal 2014, one of the Division’s largest hauls ever.

“The antitrust world is becoming increasingly smaller.”
Tom Sager, Partner, Ballard Sphar

“You’re going to see a lot of continued activity, both from the Department of Justice and the Federal Trade Commission,” says Leslie John, head of Ballard Sphar’s antitrust group.

No one-size-fits-all approach exists to assess antitrust risks, John says. “For example, [you] need to look closely at areas where the company may have a particularly strong market position, because that certainly can open you up to a range of antitrust risk,” she says. Additionally, you’ll want to focus on markets where price might be a particularly sensitive issue, and areas where you interact most frequently with competitors.

High-risk factors for antitrust typically arise in markets with few competitors, where a company’s products are becoming a commodity, and the profit margin is very thin, Sager says. In addition, assess risks not only particular to your company, but also to your industry and the country where you conduct business.

Take Japanese auto parts manufacturers as an example. The Antitrust Division has been investigating a widespread price-fixing and bid-rigging scheme there, and the targets read like a who’s who of Japan Inc.’s auto division: Hitachi Automotive Systems, paying $195 million; Mitsubishi Electric, paying $190 million; Toyo Tire & Rubber, paying $120 million; and JTEKT, paying $103.2 million, to name just a few.

Another hurdle for compliance and legal professionals is to deduce the emerging areas where their companies may face risk, John says—perhaps a new market, or a new product line, a new price, a new joint-venture partner. “Where is the next wave of investigations going to come from? What business activity is a company engaging in that could put them in the crosshairs of that investigation?” she says.


Below the Department of Justice recaps the total amount of criminal fines and penalties that resulted from its Antitrust Division prosecutions for fiscal year ending Sept. 30, 2014.
The Department of Justice collected $1.861 billion in criminal fines and penalties resulting from Antitrust Division prosecutions in the fiscal year that ended on Sept. 30, 2014. 
Contributing in part to one of the largest yearly collections for the division, five of the companies paid in full penalties that exceeded $100 million, including a $425 million criminal fine levied against Bridgestone Corp., the fourth-largest fine the Antitrust Division has ever obtained.  The second-largest fine collected was a $195 million criminal fine levied against Hitachi Automotive Systems Ltd. 
The three additional companies that paid fines and penalties exceeding $100 million were Mitsubishi Electric Corp. with $190 million, Toyo Tire & Rubber Co. Ltd. with $120 million and JTEKT Corp. with $103.2 million.  The collection total also includes penalties of more than $561 million received as a result of the division’s LIBOR investigation, which has been conducted in cooperation with the Justice Department’s Criminal Division. 
In addition, in the last fiscal year the Division obtained jail terms for 21 individual defendants, with an average sentence of 26 months, the third-highest average ever. 
Source: Department of Justice.

The Federal Trade Commission, for example, has made known that it is pursuing the pharmaceutical industry, particularly so-called “pay for delay” settlements, where makers of brand-name drugs pay makers of generic drugs to keep cheaper versions of their money-makers off the market.

The financial sector can also expect to see a continued aggressive antitrust enforcement environment, specifically the Division’s probes into alleged manipulation of various financial benchmarks and exchange rates. The $1.86 billion collected by the Antitrust Division last year, for example, included more than $561 million received as a result of the division’s LIBOR investigation.

If you have a strong market position in jurisdictions where antitrust enforcement is rising, consider enlisting the help of local counsel who can track regulatory and legal developments. Dupont, for example, has a broad network of attorneys—both in-house and external—who monitor antitrust developments, and ensure that the company remains in compliance, Sager says.

Competitor Interaction

Any interaction with competitors in the same industry or market also may draw antitrust scrutiny and must be examined carefully. Even in the absence of wrongful intent, any contact with competitors can trigger questions about potential antitrust violations.

Take, for example, trade association settings. “Stick to the agenda and the subjects discussed, and you’ll be fine,” Sager says. “As we found out, that’s not always the case.”

To address that risk, Sager recalls, Dupont had been “very vigilant in monitoring trade association participation by employees.” During his tenure there, the company began auditing such activity, and “it was somewhat out of control in that the sheer number of people attending these trade associations was far beyond what any of us envisioned.”

Sager helped establish a policy (still in operation today) that if a Dupont employee wants to attend a trade conference, the expectation is that he will first obtain clearance. “It helped us to ensure compliance with antitrust laws, but it also eliminated some unnecessary travel,” he says.

Dupont also has a formal notification system in place. Whenever someone intends to meet with a competitor, the employee must file a document notifying the CEO and general counsel as to why the meeting is taking place and who will be in attendance, Sager says.

Compliance Training

As another means to protect against antitrust violations, companies should expand the reach of their antitrust compliance training to employees all around the globe, and spell out rules about what can and cannot be discussed with competitors. That’s easier said than done, however, in part because in some countries, collusion among competitors has long been a culturally accepted practice.

Mark Robertson, a former legal counsel at Hilton Worldwide now at law firm Larkin Hoffman, warns that one big obstacle is how to implement a worldwide training program that satisfies the many antitrust laws globally, and their sometimes conflicting directives.

“A good principle is to always ensure you’re not being prescriptive with the local business unit leaders,” Robertson says. “Instead of trying to apply legal principles … start with the business principles first.”

That being said, training is a whole lot more effective with the threat of punishment for antitrust activities. So take these parting words from William Baer, assistant attorney general for the Antitrust Division, in a recent speech about antitrust enforcement:

“If any company continues to employ such individuals in positions of substantial authority; or in positions where they can continue to engage directly or indirectly in collusive conduct; or in positions where they supervise the company’s compliance and remediation programs; or in positions where they supervise individuals who would be witnesses against them, we will have serious doubts about that company’s commitment to implementing a new compliance program or invigorating an existing one,” he said.