Don’t Let Antitrust Claims Harm Your Company’s Reputation

Antitrust claims can be a lightning rod for the wrong kind of attention to a company. And, with consequences that can include forced breakups, criminal charges, blocked transactions, and monetary penalties, there are numerous ways that antitrust actions can damage a company’s business and reputation. In fact, mere allegations of anticompetitive activity have the potential to harm a company’s standing with its most important stakeholders.

There is no silver bullet to resolve these issues quickly, but companies, in collaboration with counsel, can help counter damaging antitrust allegations and mitigate concerns through effective, timely and sustained communications.

Companies typically face two types of antitrust allegations: either they are (or effectively are) a monopoly or they are one of several industry players engaging in collusive, anticompetitive behavior. From a communications perspective, many of the challenges companies encounter are similar in each circumstance, but managing the response may involve different strategic considerations.

Why Antitrust Allegations Are Difficult to Manage

There are several concerns specific to antitrust allegations that make them particularly difficult to manage from a communications perspective. These include stakeholder impact, the potential for reputational and legal risk to expand, a cadence of damaging press coverage, and empowered opponents.

Stakeholder Impact

The reason any antitrust claim can be so damaging is that, by definition, the company is alleged to be mistreating one or more of its key stakeholders. Moreover, these allegations can generate backlash from similarly situated stakeholders—for instance, if one customer accuses a company of inflating prices, other customers may wonder if they have also been overcharged.

Escalating Concerns

Relatedly, concerns that a company is abusing its position in the market can quickly move throughout the value chain. If a company’s suppliers were to allege that it is suppressing the prices for their product or service, its customers may be prompted to ask, “If you’re paying them so little, why am I paying so much?”

Increasing Scrutiny

There often can be a “pile on” effect from other parties looking to capitalize on antitrust allegations. Private litigation may attract the attention of government regulators, or conversely, government scrutiny may lead to private actions against a company. These can have a “snowball” effect that drives a cadence of negative news about a company or industry.

Headline-Grabbing Allegations

Adversaries often have the advantage of easily digestible and damaging allegations. Conversely, a company’s defense may be more complex and involve explaining market factors, existing or future consumer benefits, or the legal standard of alleging plausible “plus factors” (i.e., purported collusive activity beyond mere parallel, market-driven conduct).

Creating ‘Unnatural Allies’

Antitrust claims can disrupt a company’s stakeholder ecosystem and bring together various groups that may not ordinarily occupy the same side of an issue. This dynamic not only changes a company’s calculus around who it can rely on for support but also can lend credence to the allegations—for instance, if congressional Republicans and Democrats jointly criticize the company.

These ripple effects can create a years-long overhang for companies. In response, a company needs to be prepared to sustain a strategic and targeted communications plan that effectively leverages its position, people, and value to the market, particularly around key milestones and potential flashpoints.

A Cross-Functional Working Group Is Essential

Given that different intra-organizational groups and functions can have varying objectives and perspectives on risk, it is critical that companies establish a cross-functional working group to guide the response.

Executing a communications strategy that works hand in glove with legal counsel and subject matter experts can help a company maintain its reputation as it navigates antitrust-related challenges.

To be effective, companies should:

• Nail the Narrative. A company facing antitrust allegations will need a strong narrative that articulates its position and simplifies complex concepts. Messaging should be adapted to address the specific concerns of various constituencies and evolve in response to new developments or allegations.
• Calibrate the Response. The type of antitrust allegations a company faces should inform how aggressive to be in response. For industry-wide anticompetitive conduct, it may be advisable to allow higher-profile players or trade associations to defend the industry. For allegations of monopoly power or individual restraint of trade the company should consider a full-court press in defending itself.
• Prepare and Train Executives. When facing charges of monopolizing the market, top executives, including the CEO, can be thrust into the role of publicly defending the company. Whether testifying before Congress or speaking to the media, executives should be rigorously trained on messaging and well-practiced in handling tough questions. Conveying credibility, authenticity and transparency from the top can help shape how key audiences react to the company’s position.
• Equip Employees. Leadership should also ensure that external-facing employees are well armed to articulate the company’s position and that all employees receive an appropriate cadence of communications updating them on the situation.
• Engage and Educate Stakeholders. Companies should evaluate the stakeholder landscape and engage and educate their most important and influential stakeholders. Whether these are business partners, suppliers, trade organizations, elected officials, NGOs or others, making sure key groups understand the company’s perspective can empower supporters and reassure potential skeptics.
• Identify and Deploy Credible Third-Party Supporters. Finally, given the complexity of these matters, having independent, respected experts distill market economics for lay audiences can be extremely useful.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Mike Dolan is a managing director at Finsbury and specializes in providing strategic communications counsel on crisis management, litigation and legal issues, government investigations and regulatory matters, cybersecurity and data privacy issues, and other high-stakes situations across a range of industries.