"Antitrust litigation:" Those can be frightening words for executives at some of the world's biggest companies.
Take the computer industry. For years now, Microsoft has been mired in court, facing charges of predatory behavior by the US Department of Justice and the attorneys general of more than a dozen states. It has seen its name and business practices dragged through the mud and its very future as a single company thrown into doubt.
Intel, in stark contrast, has managed to avoid prolonged, high-profile antitrust cases. It's remained above the fray, its business focus largely undisturbed by trustbusters.
Why? Because of Intel's antitrust compliance program, which is an integral element in the chip maker's business strategy. In an age increasingly characterized by global markets that are dominated by a few huge companies, Intel's approach to compliance provides a valuable model for any enterprise that may come under regulators' scrutiny.
Very early in its history, Intel came to understand the need to play by the rules. An innovator in memory chips and microprocessors, the company became a success soon after it was founded in 1968. But in the mid-1980s, its growth began to accelerate rapidly, thanks largely to the success of its latest microprocessor, the 386.
As the company expanded at a faster clip, CEO Andy Grove became increasingly focused on avoiding a major antitrust suit. He did not want to endure a fate like AT&T's, which had recently been broken into pieces by the courts. So he decided to go on the offensive.
Rather than wait for antitrust problems to develop, Intel would do everything in its power to ensure that the issue would never arise. The company set its sights on developing what its general counsel, Tom Dunlap, refers to as "the world's best antitrust compliance program."
After talking with Dunlap about antitrust law, Grove came to appreciate that the line separating acceptable from unacceptable conduct was not clear-cut. There were substantial gray areas. "So," he says, "I suggested we put a `guard band' on the safe side of the conduct line."
A guard band, in engineering parlance, is a margin of safety: It is the difference between, for example, a stated specification and the higher level of performance that Intel actually requires. In the antitrust context, it became shorthand for compliance standards that were more conservative than the company's literal reading of the law.
Developing "new specs for sales conduct, business conduct and business practices," as Grove puts it, was the easy part. The real challenge lay in communicating senior management's commitment throughout the ranks.
Intel began by instituting live training for all affected employees. The curriculum covered several basic dos and don'ts: no price fixing, no exclusive contracts where microprocessors were concerned, no talking with competitors about product and pricing strategies, and so on. But it also addressed the gray areas, such as technical cooperation and tied sales, that were most likely to trip people up. This was followed by customized training programs for different parts of the company.
But the company didn't rely on lectures and workshops alone. Beginning in the 1990s, Intel's legal department carried out random audits of employees' files. Lawyers would swoop in and seize a manager's papers, disks and e-mail, taking all the documents and files that might be demanded by the Federal Trade Commission or Justice department.
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