© 2012 Dechert LLP Managing Antitrust Risk and Staying Compliant in an Evolving Competition Law Landscape C&E Practice Group CLE Geralyn Trujillo – New York State Attorney General’s Office Jonathan Streeter – Dechert LLP Michael Weiner – Dechert LLP 12 June 2013

Global Antitrust Enforcement Update 2 JurisdictionRecent Activity Australia Imposed its largest antitrust fine ever (USD68m) in a single investigation against airline cartel members in 2012 ChinaImposed its largest antitrust fine ever in January 2013 (USD57m) against six LCD manufacturers EuropeImposed EUR1.47 billion fine on CRT makers – the largest EU fine ever in a single investigation IndiaImposed USD1.1 billion fine on cement cartel members in 2012 South Korea Amended competition laws to increase maximum fines, extend statute of limitations, and increase incentives for cartel recipients to come forward United StatesImposed its largest antitrust fine ever ($500m) against AU Optronics, a Taiwanese LCD maker, in 2012

Vigorous Criminal Enforcement in U.S. 3 U.S. DOJ sets new record in 2012 for highest criminal antitrust fine total Individuals are sentenced to prison more often and given longer sentences Foreign nationals are sentenced to prison for participation in conspiracies affecting U.S.

Recent and Notable NYC-Based Antitrust Cases e-Books Litigation –Alleged conspiracy among publishers to change the model of e- books distribution to an agency model –Characterized as per se unlawful price fixing Twin America Joint Venture –Non-reportable transaction in $100 million “hop-on-hop-off bus tours in NYC” market. Christie’s/Sotheby’s –Price-fixing conspiracy; sudden change in behavior, response to downturn –Criminal convictions, prison sentences, high profile public trial –Immunity for Christie’s CEO 4

Financial Sector Antitrust Cases Bid-Rigging Cases –Private equity bidding consortia –Municipal bonds investment contract auctions –Real estate foreclosure auctions –Municipal tax lien auctions Price-Fixing Cases –LIBOR –Payment Cards Interchange Fees Morgan Stanley / KeySpan 5

Update on NY Attorney General’s Office Enforcement Litigations –Actively litigating the case to enjoin the Twin America Joint Venture –NY is a plaintiff in the eBooks case against Apple Settlements –LCDs price fixing case –Municipal bonds derivatives bid rigging investigation Confidential investigations of mergers and a variety of conduct, including bid-rigging, price-fixing, IP issues 6

Managing Antitrust Risk Designing an Effective Compliance Program Responding to Actual and Suspected Violations Privilege Issues 7

Compliance Objectives Prevention Detection Qualification as an Effective Compliance Program for Prosecutorial Discretion / Mitigation / Leniency Purposes 8

What’s Effective? Ten Commandments… 1. Empower a Chief Ethics and Compliance Officer –Independent, but a participant in senior management decision-making –Appointed by and reporting directly to the Board or a committee –Supported with necessary resources and infrastructure 2. Senior Management Support –Active participation and support –Not just tone: Action 9

Commandments… 3. Standards and training –Clear articulation of standards and policies –Ongoing, practical, memorable training –Tailored to the company – and to the types of employees (and third parties) –Local / regional differences in law 4. Reporting systems –Ability to obtain advice and report suspicions without going directly to supervisors –Protection from retaliation –Privilege issues 10

Commandments… 5. Respond to reports – and violations – promptly and thoroughly; establish protocols for handling reports 6. Risk assessment: Where (geographically and sectorally) are issues likely to arise? 7. Institute controls to make cartel conduct difficult, e.g., –Price change justifications –Trade association controls. 11

Commandments… 8. Incentives and discipline –Reward compliance / integrate into employee evaluation –Discipline managers who fail to prevent / detect violations or who do not support compliance efforts. Do it publicly 9.Measure effectiveness, evaluate practices, benchmark techniques, and document diligence 12

Commandments… 10. Audit and monitor to detect cartel activity, using appropriate screens based on: –Improbable events –Control groups –Price and cost information –Market share –Mathematical laws 13

Responding to Actual and Suspected Violations When to conduct an internal investigation Benefits of self-reporting –DOJ leniency program –Preserving priority with a “marker” –Leniency requirements –Limitations Dealing with enforcer show-ups, dawn raids 14

Privilege Issues Representing individuals vs. the company –Appropriate warnings –When to recommend separate counsel –Dealing with enforcer requests that the company appoint separate counsel Waiver –Productions to DOJ/FTC –Productions to DGComp Keeping compliance advice privileged 15