best practices for preventing and defending against ... · 6/8/2019 · •underestimating...

Best Practices for Defending Against and

Preventing Antitrust Claims

Brian Savage

General Counsel, US Generics

Teva Pharmaceuticals

W. Ian Wallace

General Counsel

Lassonde Pappas

Sarah Kulik

Associate

Duane Morris

Sean P. McConnell

Antitrust Partner

Duane Morris

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U.S. Antitrust Laws

• Section 1 of the Sherman Antitrust Act of 1890

• Section 2 of the Sherman Antitrust Act of 1890

• Clayton Antitrust Act of 1914

• Federal Trade Commission Act of 1914

• Robinson-Patman Act of 1936

• State Laws

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U.S. Antitrust Enforcers

• Federal

– Department of Justice and Federal Trade Commission

• State

– State Attorneys general

• Private Actors

– Customers, suppliers, competitors

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Myriad Ways To Violate The U.S. Antitrust Laws

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• Fixing prices

• Rigging bids

• Allocating customers

• Allocating territories

• Group boycotts

• Monopolization

• Failure to file under HSR

• Gun-jumping

• Interlocking directorates

• And more …

Antitrust Compliance is CRITICAL

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• Potentially severe consequences for companies and individuals

– Jail time (average sentence is 20 months)

– Criminal fines (up to $100 million or twice gain/loss)

– Civil fines ($42,520 per day)

– Private litigation (treble damages)

– Disgorgement and unjust enrichment

– Disqualification from government contracts

– Time and expense, reputational harm

Criminal Enforcement Trends

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Source: https://www.justice.gov/atr/criminal-enforcement-fine-and-jail-charts

Civil Enforcement Trends

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• Focus on “Big Tech” and pharmaceuticals industries

• Review of vertical mergers

• Pursuit of failure to file HSR

• Improper information exchanges

• Challenges to no-poach agreements


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Antitrust Risk Area Common Communication Pitfalls

Collusion: Sherman Action Section 1 prohibits

anticompetitive agreements or coordinated conduct between

two independent companies

• Information sharing that creates the appearance of

collusion

• Signaling

Monopolization: Sherman Act Section 2 prohibits unilateral

anticompetitive or exclusionary conduct by companies with

market power

• Exaggerating market position

• Underestimating competition

• Suggesting business decisions have anticompetitive intent

Mergers and Acquisitions: Clayton Act Section 7 prohibits

mergers, acquisitions, divestitures, and join ventures that

substantially lessen competition

• Exaggerating market position

• Underestimating competition

• Inaccurate misleading information

• Suggesting transaction will have anticompetitive

consequences

Each of these pitfalls could lead to costly internal and external

investigations, litigation, fines, busted deals, or even jail time


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• A strong antitrust compliance policy is a central component of

any antitrust compliance program

• Policy must reflect a core commitment to antitrust compliance

• For an effective antitrust compliance program, a strong antitrust

policy must be combined with other components, including

training, risk assessment, monitoring, and continuous

improvement


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1. Create a culture of compliance

2. Identify risks and weaknesses

3. Create effective content

4. Program methodology


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Ways to Create a Culture of Compliance

1. Make compliance a visible company value

2. Find the right messaging

3. Intertwine business strategy with compliance

4. Eliminate cultural perception that compliance is “tattling”

5. Identify “carrots” in addition to “sticks”


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Identifying Risks and Weaknesses

1. Utilize statistical screening methods and enhanced technology

to identify the key areas of risk

2. Review customer and/or competitor contacts

3. Audit the effectiveness of training through interviews


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Creating Effective Content

1. Tailor content specifically

2. Focus on factual scenarios

3. Develop arsenal of red flags to use in trainings


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Program Methodology

1. Web training modules

2. Document reviews

3. Mock dawn raid

4. Staggs of competitor contact

5. Small group discussions of case scenarios


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“Living” Compliance Programs

1. Effective antitrust compliance should be organic and evolving

2. Strong compliance programs must be continuously assessed as

situations change and risks evolve

3. Compliance trend is toward risk management approach


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• Threshold Issues

– Federal courts have exclusive jurisdiction over claims arising under

federal antitrust laws

– Class Action Fairness Act of 2005 (CAFA)

– Arbitrability of antitrust claims

– Multidistrict litigation


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• Class Actions

– Prerequisites to a class action

Numerosity, commonality, typicality, adequacy, ascertainability

– Additional requirements under Rule 23(b)

– Class certification issues

– Effect of judgments in class actions


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• Discovery Issues

– Scope

– Electronic discovery (ESI)

– Phone Records

– Third parties

– Grand jury materials

– Attorney-client privilege

– Fifth Amendment issues


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• Elements of Private Damages Suits

– Actions by private persons

– Actions by governments

– Injury-in-fact

– Antitrust injury

– Remoteness

• Impact of Criminal Enforcement on Private Damages Suits

– ACPERA

– Criminal investigation can be evidence in support of private lawsuit


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• Damages

– Treble damages

– Joint and several liability

– Burden of proof

– Calculation of damages


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• Elements of Private Suits for Injunctive Relief

– Standing issues

– Preliminary injunctions

– Permanent injunctions

– Divestiture


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• Defenses

– Statute of limitations

– In pari delicto

– Unclean hands

Thank You!

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Any Questions?

Brian Savage

General Counsel, US Generics

Teva Pharmaceuticals

W. Ian Wallace

General Counsel

Lassonde Pappas

Sarah Kulik

Associate

Duane Morris

Sean P. McConnell

Antitrust Partner

Duane Morris

best practices for preventing and defending against ... · 6/8/2019 · •underestimating...

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