Effective Compliance

The U.S. Department of Justice (DOJ) uses the Federal Sentencing Guidelines to compute sentencing ranges for antitrust offenders, among others. Specifically, it uses chapter eight, “Sentencing of Organizations,” which includes content about effective compliance and ethics programs. The guidelines call for the following minimum requirements for an effective compliance and ethics program:

  • Establish standards and procedures to prevent and detect criminal conduct;
  • Ensure that the company’s governing authority (the board; top management; high-level personnel) exercises reasonable oversight of those standards and procedures;
  • Make reasonable efforts to keep individuals whom organizations knew or should have known have engaged in illegal activities or conduct inconsistent with an effective program out of key positions;
  • Communicate standards and procedures by training directors, employees, and agents, as appropriate, and by other means;
  • Monitor and audit the program to detect criminal conduct, evaluate the program periodically, and have and publicize a system for reporting suspected violations and seeking guidance;
  • Promote and consistently enforce the program through appropriate incentives and appropriate discipline; and
  • After criminal conduct is detected, take reasonable steps to respond appropriately and prevent further similar criminal conduct, including necessary modifications to the ethics and compliance program.

Despite this general guidance, some have felt that the DOJ has not been very clear about what makes existing, company-imposed antitrust compliance programs effective enough to earn a lowering of antitrust fines under the Sentencing Guidelines.

In 2014, the DOJ’s Brent Snyder, Deputy Assistant Attorney General for Criminal Enforcement, identified five hallmarks of an effective program (Lynch & Carlberg, 2016; Rosman et al., 2015); not dissimilar to the Sentencing Guidelines.

  • Create a “culture” of compliance from the top management;
  • Ensure the entire organization is committed to, participates, and understands the program and has the opportunity to report violations anonymously and without fear of retaliation;
  • Proactively monitor and audit the program;
  • Appropriately discipline employees engaged in collusive conduct; and
  • Implement procedures to prevent recidivism.

The Kayaba Industry Company case, settled in 2015, helped to further define the DOJ’s definition of an effective antitrust compliance program (Levitsky, 2015). In its Kayaba Sentencing Memorandum, the DOJ provided some specific examples (as summarized by Levitsky).

  • Training of senior management and all sales personnel. In addition to classroom training, it provided one-on-one training for personnel with jobs, such as sales people, where there is a high risk of antitrust crimes.
  • Testing the effectiveness of the training by examining the employees’ awareness of antitrust issues before and after the training.
  • Prior approval, where possible, of all contacts with competitors and reporting of all contacts with competitors. The reports are to be audited by in-house counsel.
  • A requirement that sales personnel certify that all the company’s prices were indepen­dently set, and that they had not exchanged pricing information or agreed with any competitors on a price.
  • Establishment of an anonymous hotline to report violations.
  • Disciplining of violators.

The DOJ specifically emphasized that compliance improvements, including the steps summarized above, were set in motion from “‘‘the moment KYB [Kayaba] received notification of the government’s investigation.” It also emphasized that the response ‘‘sought to change the culture of the company to prevent recurrence of the offense,’’ (Lynch & Carlberg, 2016).

A checkbox approach to ethics and compliance is not sufficient. Evidence of culture change—to a real culture of ethics and compliance—and evidence of a real organizational commitment to that culture from the top down are essential components of effective compliance programs in the eyes of the DOJ.

Ethical Advocate is an independent, third-party ethics and hotline company that specializes in advocating ethical culture and behavior in the workplace. Feel free to contact us for additional information.


Levitsky, Steven. “How Does an Antitrust Compliance Program Meet DOJ Standards? For the First Time, The DOJ Explains.” DLA Piper (Presentations web page), November 15, 2015. https://www.dlapiper.com/en/us/insights/publications/2015/11/how-does-an-antitrust-compliance-program-meet/

Lynch, Niall E. and Christopher J. Carlberg. “An Extraordinary and Demonstrable Change in Compliance Culture: How to Receive Sentencing Credit from the DOJ’s Antitrust Division for a Compliance Program.” Bloomberg BNA: Antitrust & Trade Regulation Report, 2016. https://www.lw.com/thoughtLeadership/compliance-how-to-receive-sentencing-credit-from-the-DOJ

Rosman, Mark, Jeff VanHooreweghe, Takeyoshi Ikeda, and Theodore Serra. “Lightning Strikes Twice: DOJ Gives 2nd Compliance Credit.” Law360, October 15, 2015. https://www.wsgr.com/publications/PDFSearch/law360-1015-2.pdf