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CORPLAW7 COMMENTARIES

Antitrust Compliance Baseball

By Barry J. Lipson
Strike One: Antitrust Compliance Programs are worthless as everyone knows antitrust has joined the Dodo
and the Dinosaur! -- Company Management
Strike Two: Antitrust Compliance Programs are worthless as the Antitrust Division insists that vicarious
liability is attributed to Companies through their disobedient lower level managers unauthorized acts regardless
of the tenaciousness of the Companies Antitrust Compliance Programs! -- Company Management
Strike Three: We have, therefore, pulled the plug on such worthless Antitrust Compliance Programs that
provide us no vicarious liability protection for violating extinct laws! -- Company Management

BALL ONE -- GOVERNMENT PROSECUTIONS

A company must not be beguiled into abandoning its Antitrust Compliance Program, or not adopting such
a program in the first place, on the grounds that antitrust has joined the Dodo and the Dinosaur. The truth of the
matter is that these are living laws and both Federal Republican and Democratic Administrations pride
themselves in convicting and sending to jail more hardcore antitrust violators than the prior Administrations.
The States and foreign nations also have their own antitrust laws. And if the Government elects to proceed
civilly, like any civil suit, the Government only needs to establish that there is a 51 percent probability that you
did what they accused you of doing. Under such circumstances it certainly is worthwhile to have actively in
place an Antitrust Compliance Program so that the Company is well positioned to defend itself here.

BALL TWO -- TURNING STATES EVIDENCE

Then too, your friendly competitors, when they feel threatened or cornered are strongly motivated and
encouraged to turn you in by turning States Evidence, to obtain leniency for themselves.1 Under the
Leniency Program, a firm may be granted protection from criminal antitrust prosecution if it voluntarily reports
its involvement in an antitrust conspiracy and then fully co-operates in the criminal prosecution of its coconspirators . . .; and all officers, employees, and directors who come forward with full cooperation can also
avoid any type of criminal liability in the matter. So again it certainly seems worthwhile to have had and have
in place an Antitrust Compliance Program for the Company to be well positioned to defend itself here.

BALL THREE CIVIL PROSECUTIONS

Moreover, the private treble damage plaintiff and class action plaintiffs must always be contended with,
regardless of the prosecutorial policies that are being followed by the then current Administration. Remember,
it was never intended that the antitrust laws would be enforced solely by the Federal government. The
mandatory trebling of damages and availability of class actions were purposely included to also encourage
private enforcement. Indeed, the antitrust laws have always predominantly been enforced by private injunctive,
treble damages and class action suits; and as most such suits settle before trial with well-crafted non-liability
admitting agreements, which quite often contain non-disclosure provisions or gag order, you well probably
never know of their existence. So here too it certainly seems worthwhile to have had and have in place an
Antitrust Compliance Program for the Company to be well positioned to defend itself.
Therefore, if the government calls; if you are sued or threatened under the antitrust or trade regulation
laws; if you suspects you may be open to such a suit; or if an antitrust counterclaim is asserted against you in a
suit brought by you, these should always be taken seriously, and experienced antitrust counsel obtained. It must
be remembered that the trebling of damages is mandatory under the antitrust laws, class action suits are sought

after as cash cows in this area, and such suits can always lead to Federal, State and/or foreign government
prosecutions and/or a string of "me too" civil suits.

FOUL BALL -- UNAUTHORIZED ACTS

While it is true that in criminal antitrust prosecutions the Antitrust Division of the U.S. Justice Department
takes the position that Antitrust Compliance Programs are worthless in defending companies against the acts of
their lower level managers, even if unauthorized and done by disobedient employees, and in so doing strive to
gyp Companies of the sum total of the U.S. Supreme Courts holding in Gypsum2 that criminal intent must be
proven, the jury here is still out.
Thus, Theodore & Frederick Banks current Corporate Legal Compliance Handbook advises Companies,
corporate counsel and litigators that: Notwithstanding the governments view of Koppers and compliance
programs, the trial court in Koppers did charge the jury that it could consider the corporate compliance
program in determining whether to impute an agent or employees intent to the Koppers Company. The
court instructed the jury as follows:
One of the factors, among others, that you may consider in determining the intent imputed
to Koppers Company through its [managerial] agents or employees is whether or not that
corporation had an antitrust compliance policy. ln this regard, you are instructed that the
mere existence of an antitrust compliance policy does not automatically mean that a
corporation did not have the necessary imputed intent. lf. However, you find that Koppers
Company acted diligently in the promulgation, dissemination, and enforcement of an
antitrust compliance program in an active good faith effort to ensure that the employees
would abide by the law, you may take this fact into account in determining whether or not to
impute an agent or employees intent to the Koppers Company.3
Similar instructions were given in United States v. International Paper Co.4
The Banks Handbook, which presumably one may bank on, continues: Significantly, Barry Lipson, one
of the defense counsel for Koppers Company, points out that the trial judge decided to admit evidence of the
compliance program and charge the jury the way [s]he did. over strong U.S. Justice Department opposition.
because of comments by the Ninth Circuit Court of Appeals in United States v. Hilton Hotel Company.5 'The
trial court concluded that the converse of the Ninth Circuits holding in Hilton Hotels permitted introduction
of compliance testimony in the case before it. Thus, Mr. Lipson notes that the Ninth Circuit in Hilton Hotels
held that the defendant could not gain exculpation by issuing general instructions .... 6 In contrast, in Koppers,
Mr. Lipson notes that, during the in-chamber instruction conference, the court indicated that the defendant went
beyond a simple statement of policy and did take further efforts to ensure that their employees are in fact
apprised of the policy and are instructed to comport their conduct to it.7 Having found the factual converse of
Hilton Hotels, it permitted the legal converse as well by permitting evidence of a compliance program.
However, the contrary position (the Antitrust Divisions position), was taken in United States v. Basic
Construction Co., a Fourth Circuit decision where Certiorari was denied by the U.S. Supreme Court, thus
leaving the jury still out on the question of whether or not an antitrust compliance program may be taken
into account in determining whether or not to impute an agent or employees intent to his employer?
Moreover, under theories of the proper applications of prosecutorial discretion,8 there is also the question
of whether the Government should have treated such a company with an active and vigorously-administered
Antitrust Compliance Program as anything more than an unindicted co-conspirator, while criminally
pursuing the arrant non-complying employee and his co-conspirators.

Then too, while the Antitrust Division of the U.S. Justice Department has fought vigorously to bar the use
of Antitrust Compliance Programs in defending companies against the acts of their lower level managers in
criminal per se antitrust prosecutions, no matter how unavoidable these acts may have been, they have just as
vigorously advocate the use of Antitrust Compliance Programs by companies to prevent such acts in the first
place. You could say their position is that the success of such a program is the reward in itself (though such
reward often goes unnoticed), but that its failure in even the smallest instance must not be rewarded, to wit a
zero tolerance approach. But the pros and cons of zero tolerance policies is a discussion for another day.

HOME RUN
Thus, what you really want from an Antitrust Compliance Program is to Hit A Home Run! That is, what
you want is to be properly counseled so that you are not placed in jeopardy of being prosecuted or sued under
these laws in the first place! And prime considerations for avoiding suit is how counsel is given and received.
I personally would want to receive counsel from someone who is knowledgeable in the area in question; who
does not just merely say yes or no, but guides me so I do not blunder into the no path; who is not afraid to
tell me what I need to hear; and who knows that being prosecuted or sued is already a defeat for his or her
counseling.9 But most important, Antitrust counsel, on their part, must be available, responsive and ready to
advise as to the risks involved in continuing or initiating the actions or practices under consideration, and as
to practical and lawful alternatives for achieving all or most of the economic objectives of a doubtful
program, practice or actions.10
Indeed, it is apparent that at least one individual who has served hard time for price fixing and bid rigging,
wishes he had been so counseled. While still in prison, he wrote to the members of the trade association of
which he had been executive director, advising that: As you know, I am at Elgin Air Force Base Federal
Prison Camp (where surely he has had the opportunity to improve his baseball skills). But, more importantly
he took this opportunity to advise his industry members that:
There are no bars or fences but they take a head count about every four hours. Very few
have ever walked out of here. If they try and get caught, they are shipped to a maximum
security prison. And, they are caught. . . . I would recommend that each of you study the
Sherman Act. There are many ways we might be outside the law and not realize that we
are in danger." Emphasis added.
This incarcerated felon then further advised his former colleagues that he planned to arrange an Antitrust
Compliance Seminar for them as soon as he was released. There should be little doubt that such a seminar,
arranged by a former antitrust inmate, would provide even a much greater "compliance incentive" than any
previous seminars, for he provides the living proof that you can get caught.

END OF GAME COMMENTARY

So thats it folks our blow by blow commentary of the Final Inning of the first game of this session in
the ongoing Game of Business Life and Survival.
To re-cap, it was the Top of the Ninth, two outs and the score was tied zip--zip!
The Old School Dodos were at bat:
Strike One The Dodos doubted the viability of the Antitrust Laws or that it would be worth their while
to take these laws seriously!
Strike Two -- The Dodos doubted the worthiness of Antitrust Compliance Programs as such programs
appeared to be worthless in, after the fact, putting the Genie Back in the Bottle for them.

Strike Three The Dodos, therefore, killed such unworthy Programs! But, then, who wants or needs
vicarious liability protection for violating extinct laws! -- Non sequitur, me thinks! -- True Dodo
Management!
Now, Bottom of the Ninth, still tied zip--zip!
The 21st Century Realists were now at bat:
Balls One, Two & Three The Realists recognized the worthiness of Antitrust Compliance Programs in
helping to insulate them from Criminal Prosecutions of these living laws, from Squealers and from Civil Suits.
Foul Ball -- The Realists, alas, could not obtain any assurance of the worthiness of an Antitrust Compliance
Program in insulating them from criminal prosecution where an arrant sheep had escaped the watchful eye of
their faithful shepherd, and had strayed far from the Companys fold (though the jury be still out).
Home Run -- The Realists established and faithfully administered a worthy and Effective Antitrust
Compliance Program,11 thus forestalling the need of avoiding imputed vicarious liability in the first place
and hitting a home run!

Winners by a Home Run -- 21st Century Realists !!!

So the bottom line is simply that an Antitrust Compliance Program is as worthwhile
as you make it. You can strike out, plod along, foul or hit a home run!
We recommend that you strive for a home run!

Please address your comments, questions and suggestions for future Corplaw7 Commentaries
Columns on marketing and business law, and other interesting subjects to bjlipson@gmail.com .
Copyright8 2010-2011 by Barry J. Lipson.
1

See Barry J. Lipson, Local Firm Sends Competitors To Jail And Gets $300+ Million In Fines For U.S.,
http://www.scribd.com/doc/34352500/Corplaw-Commentaries-Local-Firm-Sends-Competitors-To-Jail-by-Barry-JLipson.
2
United States v. United States Gypsum, 438 U.S. 422,435 (1978).
3
Barry J. Lipson, A Survey of the Ins and Outs of Antitrust Compliance. 51 Antitrust LJ. 517, 524, n. l5 (1982),
citing United States v. Koppers Co.. Inc., Criminal No. 79-85 (D. Conn.. New Haven Div.), Jury Instructions (June
12, l980). reprinted in 129 Pittsburgh L. J. 3. 16, n. 5 (March. 198l).
4
United States v. International Paper Co., Crim. Nos. H-78-11 & 12 (S.D. Tex. Jan. 25, 1978); but stating had the
required intent; instead of impute an agent or employees intent to the Koppers Company; emphasis added.
5

51 Antitrust LJ. at 524.

Ibid.
7
Ibid., citing Chambers Conference Transcript 15-17 (June 17. 1980).
8
Barry J. Lipson, "Prosecutorial Indiscretion" & The Jackson Prosecutorial Discretion Doctrine, Federally
Speaking No. 55, http://www.scribd.com/doc/34161319/Federal-Speaking-55.
9
Barry J. Lipson, To Sue Or Not To Sue That Is The Question, http://www.scribd.com/doc/35090332/To-Sue-OrNot-To-Sue-That-Is-The-Question-by-Barry-J-Lipson-A-Corplaw-Commentary
10
Barry J. Lipson, Adopting An Effective Antitrust Compliance Program,
http://www.scribd.com/doc/34344108/Corplaw-Commentaries-Adopting-An-Effective-Antitrust-ComplianceProgram-by-Barry-J-Lipson.
11
Ibid.