Business Misconduct and Prevention Measures
The ongoing debate about corporate wrongdoing is a complex issue, with different views on whether increasing fines or punishing individuals and negligent conduct is more effective. This discussion extends beyond just antitrust violations, encompassing a variety of issues such as sanctions, money laundering, bribery, and fraud.
In the aftermath of the 2008 financial crisis, questions were raised about the financial industry's escape from prosecution during the Obama Administration's aggressive enforcement strategy. The debate continues today, with Judge Douglas H. Ginsburg and FTC Commissioner Joshua Wright proposing a more cautious approach to the application of legal penalties against corporations involved in cartel activities.
They argue that harsh corporate penalties may not deter cartel behaviour and instead advocate for stricter evidence requirements and a more careful weighing of penalties. Instead, they propose fines and potential corporate debarment for negligent oversight by corporate directors and officers.
Judge Ginsburg and Commissioner Wright also suggest a shift in focus towards targeting individuals responsible for illegal conduct, with individual criminal penalties for cartel participants. They argue that punishing negligent conduct with civil penalties and debarment will have a greater deterrence effect on corporate behaviour.
However, their argument does not include potential organisational credit for an effective ethics and compliance program. The sentencing guidelines for corporations involved in cartel activity primarily calculate fines based on 20% of the volume of affected commerce. The U.S. Sentencing Commission is currently considering raising this proxy amount to increase corporate penalties.
The Justice Department's Antitrust Division has been criticised for its failure to award credit for a company's compliance program. Increasing fines against corporations may not have as much deterrence value as punishing individuals with incarceration, according to some experts. Antitrust offenders already face harsh criminal penalties, with incarceration ranging from 10 to 16 months to as high as 87 to 108 months.
The Obama Administration is known for its aggressive enforcement program, but whether it has deterred corporate wrongdoing is uncertain. The Sentencing Commission is examining increasing corporate penalties for cartel violations, and the debate over corporate wrongdoing, punishment, and deterrence is ongoing.
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