The Failure of Corporate Governance Standards and Antitrust Compliance

Abstract

This article explores the interplay between corporate governance law and antitrust law, and concludes that fiduciary standards should be strengthened. Part I explains the need for powerful incentives to comply with antitrust laws, given the economic rewards from violations. Part II explores recent trends in antitrust law enforcement to show that violations continue more or less unabated despite major improvements in detection and prosecution of violations. Part III argues why monetary sanctions imposed on corporations should be abandoned as the primary enforcement tool, given that they merely place economic burdens on shareholders who are powerless to intervene ex ante, or even later, to prevent or rectify violations. Part IV argues that fiduciary duty law fails to provide incentives to comply with antitrust law, and that whatever weak incentives may residually exist are inadequate in the face of more powerful economic incentives to violate the law. Finally, Part V argues for the imposition of criminal and civil sanctions on boards of directors and senior managers who fail implement take strenuous and robust compliance programs. It is urged that fiduciary duty law needs reform in order to place responsibility for violations on those who have the power to prevent them; and the criminal sanctions for knowing or reckless board failures is both necessary and supported by workable precedents in other areas of vicarious liability law.

Keywords: antitrust, corporate governance, antitrust enforcement, fiduciary duty, criminal sanctions, civil sanctions