Differences in enforcement – why companies cannot always have the best of both worlds

Activity that may trigger a bribery and corruption investigation may also form a potential antitrust violation. The two can’t always be split into neat compartments. In fact, an investigation into one type of violation may trigger an investigation of the other. Enforcers pursuing cases under these legal theories, however, don’t always take a consistent approach to how they investigate and prosecute the activity at issue. Companies dragged into such double-sided investigations, especially those operating worldwide, face a potentially uncoordinated approach between antitrust and anti-corruption regulators and laws. This challenge exists in the European Union as well as in the United States.

For example, bribing a state official violates anti-corruption laws. While it may not immediately seem an antitrust concern, it may become of interest to the respective antitrust enforcer where it can be established that the bribery scheme is harmful to competition. This makes it difficult to see the dividing line between offenses of antitrust laws and offenses of anti-corruption laws. Companies that find themselves in this situation will have to deal with the peculiarities and intricacies of all laws involved. And this can turn out to be a rather complex endeavor.

The main differences and consequences in practice

Violations both of antitrust laws and of bribery and corruption laws have proved high-risk areas for companies in many industries worldwide. Multi-jurisdictional investigations are of increasing importance to businesses worldwide, with legal and compliance departments investing heavily in competition and corruption expertise. Being prepared is essential to reacting quickly, appropriately, and early in these investigations. So too is mastering the subsequent proceedings in the best way for the company. (For an overview of cartel investigations by the European Commission, see our European Investigations Guide.)

Two notable differences companies should know are the approach to corporate leniency and the credit available for pre-existing compliance programs. We address these below.

Different treatment of leniency programs

The antitrust leniency regimes in the European Union and the United States don’t extend to corruption charges. So companies that apply for leniency must be aware that cooperating with antitrust authorities, such as the European Commission and the U.S. Department of Justice (DOJ), might require them to disclose violations of anti-corruption laws connected with the reported antitrust offenses, for which they won’t necessarily be granted immunity. Antitrust leniency schemes can enable companies to escape huge fines and criminal prosecution of both the company and its employees. But they don’t apply to corruption offenses.

Secrecy is a feature of cartels, which makes it hard for competition authorities to unravel their existence. Leniency programs, however, have proved useful tools for detecting cartel activity on both sides of the Atlantic. For competition authorities in the United States as well as the European Union, these programs have been the most effective way to break cartels.

To earn the privilege and benefits of leniency, companies must fully cooperate with the antitrust authorities. As leniency depends on full cooperation, companies might find themselves having to reveal antitrust misconduct that implicates other (criminal) offenses, such as anti-corruption laws.

A company that cooperates or potentially cooperates can face the dilemma of either having to disclose conduct that subjects it to further charges or not applying for, or withdrawing from, leniency. What’s best for a company that wants to apply for a leniency program, and might also have anti-corruption exposure, depends on tailor-made solutions that take account of all the facts of the case.

Different strategies to reward compliance programs

While in bribery and corruption cases compliance efforts play an important role, this is not necessarily true for antitrust offenses, particularly in the European Union. Recent developments in the United States, however, show a shift toward greater acknowledgment of compliance in antitrust cases.

For some time, European and U.S. antitrust authorities alike have been reluctant to acknowledge compliance efforts as a factor for fine reduction when these efforts have failed to prevent violations of the antitrust laws. By contrast, compliance programs that have been implemented to ensure compliance with anti-corruption laws have generally been rewarded. This has been the case even where there was a failure to comply with anti-corruption laws.

In July 2019, the Antitrust Division of the DOJ announced a policy shift in acknowledging “corporate efforts to invest and install a culture of compliance.” Under this policy, it’s possible to be rewarded for effective compliance efforts, even when they have failed to prevent violations of the antitrust laws. There haven’t been similar developments at the European Commission level, however. So the discrepancy between antitrust and anti-corruption cases remains untouched for EU-wide infringements.

Some practical guidance

Applying for immunity or leniency can help avoid or reduce fines for anticompetitive behavior. But it doesn’t necessarily extend to corruption offenses that happen to form part of the anticompetitive scheme. Conversely, and especially at EU level, compliance efforts don’t play a major role when it comes to potential reductions of fines for antitrust law violations. However, in many European member states as well as in the United States, such efforts are usually mitigating factors in determining the fines for violations of anti-corruption laws. So far it seems companies, despite the recent policy shift in the United States, cannot have the best of both worlds.

In practical terms, in-house lawyers and compliance officers need to be alert to these differences and the potential consequences they may entail. As soon as a potential violation of antitrust laws is uncovered, it should be assessed whether this may also amount to a bribery and anti-corruption law violation, and vice-versa. In doing so, the company can take this into account in its investigation plans and decision-making. In particular, these issues will play out when weighing the pros and cons in the complex and time-sensitive assessment on whether to file for immunity or leniency from antitrust fines.