Cartel leniency in United States: overview
A Q&A guide to cartel leniency law in the United States.
The Q&A gives a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities. In particular, it covers the conditions to be satisfied, the method of making an application, availability of immunity from civil fines to individuals, the scope of leniency, circumstances when leniency may be withdrawn, leniency plus, confidentiality and disclosure, and proposals for reform.
To compare answers across multiple jurisdictions visit the Cartel leniency Country Q&A tool.
This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Cartel Leniency Q&As visit www.practicallaw.com/leniency-guide.
For a full list of jurisdictional Competition Q&As, which provide a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures in multiple jurisdictions, visit www.practicallaw.com/mergercontrol-guide and www.practicallaw.com/restraintsoftrade-guide.
Applicable laws and guidance
The US leniency programme comprises two policies:
The Corporate Leniency Policy, which was first introduced in 1978 and revised in 1993.
The Individual Leniency Policy, which was introduced in 1994.
The official statements setting out the details of each policy can be found on the website of the Antitrust Division of the US Department of Justice, at www.justice.gov/atr/public/criminal/leniency.html. A useful guide addressing frequently asked questions relating to the operation of the leniency programme is also available on the Antitrust Division's website at www.justice.gov/atr/public/criminal/239583.htm.
As part of its role in prosecuting criminal violations of the federal anti-trust laws, the DOJ administers the leniency programme (also referred to as the amnesty programme). The Antitrust Division derives its authority to administer the leniency programme from its prosecutorial discretion to decide whether to seek an indictment against a company or individual voluntarily reporting the applicant's participation in a criminal violation of the federal anti-trust laws, principally section 1 of the Sherman Antitrust Act (Sherman Act).
Scope of application
The leniency programme applies to criminal violations of section 1 of the Sherman Act, which is the primary criminal statute enforced by the Antitrust Division. The language of section 1 of the Sherman Act does not indicate whether certain violations are to be addressed criminally or civilly, but the Antitrust Division has a long-standing policy of seeking criminal indictments only in cases involving per se violations of section 1, such as:
Agreements to fix prices.
Market or customer allocation.
The leniency programme does not cover civil anti-trust enforcement by either the DOJ or the Federal Trade Commission (FTC).
The leniency programme may also apply to related offences committed in furtherance of the criminal anti-trust violation. For example, the model corporate leniency letter posted on the DOJ's website, available at www.justice.gov/atr/public/criminal/239524.pdf, provides leniency "for any act or offence [the applicant] may have committed [time period covered] in connection with the anti-competitive activity being reported". This language implies leniency not only for criminal anti-trust violations, but also for other offences that may be committed in connection with the anti-trust violation. For example, conduct that is usually integral to the commission of a criminal anti-trust violation, such as mailing, faxing, or emailing bids agreed on with competitors, can constitute other offences, such as mail or wire fraud violations or conspiracies to defraud. The protections of the conditional leniency letter (see Question 10) apply to such additional offences. However, as a technical matter, the conditional leniency letter binds only the Antitrust Division, and not the other federal or state prosecuting agencies.
Since the 1993 policy revisions, the Antitrust Division's leniency programme has become widely used. According to the Antitrust Division, of all the international cartel investigations underway at any given time, more than half are initiated by a leniency applicant; and, of the total affected volume of commerce of all the cartels that the Antitrust Division has prosecuted since 1999, over 90% were assisted by a leniency applicant. In particular, parties have sought the benefits of the leniency programme in a number of notable recent cases, including the DOJ's investigations of a large number of auto parts cartels, the air cargo case, liquid crystal display (LCD) panels, dynamic random access memory (DRAM) and numerous others.
During DOJ's fiscal year 2013 (from October 2012 to September 2013), the Antitrust Division imposed total criminal fines in an amount of US$1.02 billion, which was slightly lower than last fiscal year but still one of the highest amount of annual fines to date.
The Antitrust Division has continued to aggressively pursue the auto parts investigation. The investigation has involved a multitude of products, including wire harnesses, instrument panel clusters, fuel senders, heater control panels, speed sensor wire assemblies, seatbelts, airbags and steering wheels and anti-vibration rubber parts. To date, 27 companies have pled (or have agreed to plead) guilty and 35 individuals have been charged in price-fixing and bid rigging in auto parts, resulting in both:
Criminal fines of more than US$2.3 billion.
Imprisonment, ranging from 12 to 24 months.
In September 2013, the Antitrust Division undertook the largest simultaneous enforcement action in its history, in which nine companies and two individuals agreed to plead guilty and pay criminal fines totalling US$740 million for their roles in separate conspiracies to fix prices of more than 30 different auto parts.
In February 2014, Bridgestone Corporation agreed to plead guilty and pay a criminal fine of US$425 million (the fourth-largest criminal anti-trust fine ever imposed) for its role in price fixing automotive anti-vibration rubber parts. Bridgestone's high fines reflected the company's failure to disclose its participation in the anti-vibration rubber parts conspiracy when the company pleaded guilty in 2011 to participating in the Marine Hose cartel pursuant to the Penalty Plus policy (see Question 13).
Availability of leniency
The leniency programme set out above (see Questions 1 to 2) applies to criminal violations of section 1 of the Sherman Act. The DOJ does not have statutory authority to impose civil fines for violations of section 1 of the Sherman Act. Under the leniency programme, a successful leniency applicant can avoid both criminal convictions and criminal fines.
For the conditions that must be met by a corporate applicant to be granted immunity and criminal fines imposed on second-in applicants, see Question 7.
Not applicable (see Question 4).
As with corporate applicants, the leniency programme for individuals applies to criminal violations of section 1 of the Sherman Act.
For conditions that must be met by individual applicants to be granted immunity and criminal fines imposed on individuals, see Question 7.
The Antitrust Division's Corporate Leniency Policy offers two types of leniency:
Type A leniency, which offers immunity from prosecution where an applicant is the first to approach the Antitrust Division before an investigation is initiated.
Type B leniency, which offers immunity from prosecution where an applicant is the first to approach the Antitrust Division after an investigation has begun.
The conditions for meeting either a Type A or Type B leniency are similar and in practice the Antitrust Division has not emphasised the distinction between Type A and Type B leniencies.
Type A leniency. Type A leniency will be granted if a company comes forward before the Antitrust Division has initiated an investigation and if the following conditions are met:
At the time the company comes forward to report the illegal activity, the Antitrust Division has not received information about the illegal activity from any other source.
The company, on its discovery of the illegal activity, took prompt and effective action to terminate its part in the activity.
The company reports the wrongdoing with candour and completeness, and provides full, continuing, and complete co-operation to the Antitrust Division throughout the investigation.
The confession of wrongdoing is truly a corporate act, as opposed to isolated confessions of individual executives or officials.
Where possible, the company makes restitution to injured parties.
The company did not coerce another party to participate in the illegal activity and clearly was not the leader in, or the originator of, the activity.
Type B leniency. Type B leniency is available to companies that co-operate after an investigation has begun if the following conditions are met:
The company is the first to come forward and qualify for leniency in relation to the illegal activity being reported.
The Antitrust Division, at the time the company comes forward, does not yet have evidence against the company that is likely to result in a sustainable conviction.
The company, on its discovery of the illegal activity being reported, took prompt and effective action to terminate its part in the activity.
The company reports the wrongdoing with candour and completeness, and provides full, continuing, and complete co-operation that advances the Antitrust Division's investigation.
The confession of wrongdoing is truly a corporate act, as opposed to isolated confessions of individual executives or officials.
Where possible, the company makes restitution to injured parties.
The Antitrust Division determines that granting leniency would not be unfair to others, considering the nature of the illegal activity, the confessing company's role in it, and the timing of the company's coming forward.
In applying the last condition, the primary consideration will be how early the company comes forward and whether it has coerced another party to participate in the illegal activity or clearly was the leader in, or the originator of, the activity.
The burden will be lower if the company comes forward before the Antitrust Division has begun an investigation into the illegal activity. The burden will increase the closer the Antitrust Division comes to having evidence that is likely to result in a sustainable conviction.
However, in practice the Antitrust Division has not been inclined to disqualify leniency applicants on the basis that the applicant was a leader in or the originator of the activity. Instead, the Antitrust Division has sought to de-emphasise this element in favour of maximising the incentives for all participants in unlawful cartel conduct to voluntarily report their involvement to the Antitrust Division.
Second-in applicants. Even when the Antitrust Division has already awarded leniency in an investigation, companies implicated in a cartel may still be able to obtain significant benefits by entering into plea agreements and co-operating with the Antitrust Division.
There are a number of means by which the Antitrust Division can reward second-in companies for their co-operation, such as:
Substantially reducing fines.
Spreading fine payments over a series of instalments.
Treating the culpable executives more favourably.
The benefits for second-in applicants may be even more significant when applied together with the Amnesty Plus policy (see Question 13).
Criminal fines of second-in applicants
For second-in applicants, for offences committed on or after 22 June 2004, the statutory maximum corporate fine is the greater of either:
Twice the gross financial loss or gain resulting from a violation.
Under the Sentencing Guidelines, in lieu of the alternative sentencing measure of twice the loss or gain, the appropriate fine is calculated using a range of variables. This calculation depends on the facts of each case and results in a relatively narrow range of sentencing options.
Although the Sentencing Guidelines are no longer mandatory but advisory, the Antitrust Division typically seeks (and the judge generally imposes) sentences within the guideline range, unless the judge determines that certain exceptional circumstances exist that justify a departure from the range.
The fine range is therefore calculated as follows (Sentencing Guidelines):
First, a "base fine" amount is calculated, which is 20% of the volume of goods sold by the defendant during the course of the conspiracy in the US market affected by the anti-trust violation.
Second, a "culpability score" is calculated based on certain factors relating to the seriousness of the company's violation and efforts (if any) the company has made to prevent such a violation and to co-operate with authorities. Points are added to the culpability score if the company obstructed or impeded the government's investigation of the offence. The culpability score results in the relevant minimum and maximum multipliers to apply to the base fine and yields a fine range.
Once the fine range is determined, the Sentencing Guidelines further permit an upward or downward departure from the range. A company can obtain a downward departure by providing substantial assistance in the government's investigation or prosecution of a person other than the company.
Proceedings against employees
If a company qualifies for amnesty, all current directors, officers, and employees of the company will receive immunity (that is, they will not be charged criminally for the illegal activity), if they continue to assist the Antitrust Division throughout the investigation. The Antitrust Division's practice has been to cover both current and former directors, officers, and employees of the corporate applicant.
Separately, an individual who approaches the Antitrust Division on his own behalf to report illegal anti-trust activities may qualify for leniency under the Leniency Policy for Individuals, subject to the following principles:
As with a corporate applicant, an individual leniency applicant must admit to his participation in a criminal anti-trust violation.
The individual must not have approached the Antitrust Division previously as part of a corporate approach seeking leniency for the same conduct.
Once a company attempts to qualify for leniency under the Corporate Leniency Policy, individuals who come forward and admit their involvement in the criminal anti-trust violation as part of the corporate confession will be considered for leniency solely under the provisions of the Corporate Leniency Policy.
Leniency will be granted to an individual reporting illegal anti-trust activity before an investigation has begun if the following three conditions are met:
At the time the individual comes forward to report the activity, the Antitrust Division has not received information about the activity being reported from any other source.
The individual reports the wrongdoing with candour and completeness, and provides full, continuing, and complete co-operation to the Antitrust Division throughout the investigation.
The individual did not coerce another party to participate in the activity and clearly was not the leader in, or the originator of, the activity.
A successful individual leniency applicant is granted immunity from criminal conviction, incarceration and criminal fines.
Conflict of interest issues may arise when counsel represents both a company and an employee of that company in the same criminal action. Although the company can seek to protect its employees' interests by including them in the company's leniency agreement with the Antitrust Division, separate representation for certain employees may become appropriate, depending on the facts of the case.
If an employee fails to co-operate with the Antitrust Division's investigation, the Antitrust Division can revoke the conditional leniency granted to the employee as part of the conditional leniency to the company. If the Antitrust Division revokes the conditional leniency to the employee, they are free to prosecute the employee for the anti-trust violation and any related offenses.
The Antitrust Division may revoke the conditional non-prosecution protection granted to an employee in the following circumstances:
The employee fails to comply with his obligations under the conditional leniency letter to the company, including the continued obligation to co-operate in the investigation.
The employee is determined by the Antitrust Division to have caused the corporate applicant to be ineligible for leniency.
The employee continued to participate in the anti-competitive conduct after the company terminated its participation and notified the employee to cease his participation.
The employee engaged in, or attempted to engage in, obstruction of justice at any time.
Before the Antitrust Division makes a final determination of revocation, it will notify the employee's counsel and the company applicant's counsel in writing and provide counsel with an opportunity to meet with the staff and Office of Criminal Enforcement in a manner similar to the revocation of a corporate applicant's conditional leniency (see Question 11).
Employees of second-in applicants
For companies that are second-in applicants and whose employees can be "carved out" of any immunity pursuant to a corporate plea agreement, conflict of interest issues can arise as soon as it becomes apparent that certain individuals may be carved out of any DOJ immunity agreement and therefore be subject to potential prosecution and imprisonment.
The Sentencing Guidelines apply to employees of second-in applicants who are carved out of any DOJ immunity agreement and convicted. The base offence level calls for incarceration from ten to 16 months if an individual has no prior criminal history, with adjustments up or down according to (Sentencing Guidelines):
The individual's culpability.
Whether the individual has provided substantial assistance to the government.
The average sentencing term has steadily increased over the years:
Eight months, from 1990 to 1999.
20 months, from 2000 to 2009.
25 months, from 2010 to 2013.
Most of the sentences are uncontested because the majority of carve-out employees voluntarily enter into a plea agreement and submit to US jurisdiction rather than challenge the charges through trial. The longest sentence imposed on an individual for an anti-trust violation was five years following a two-week trial.
Individual fines range from 1% to 5% of the volume of commerce attributable to that individual in goods or services affected by the violation, but not less than US$20,000.
In April 2013, the Antitrust Division changed its carve-out practice. As a result, the Antitrust Division will only carve out employees if they have reason to believe the employee is culpable and will no longer disclose their names in the corporate plea agreement.
Previously, the names of carved-out employees were disclosed in the corporate plea agreement. Under the prior practice, carve-outs included three categories of employees:
Employees who refused to co-operate with the Antitrust Division's investigation.
Employees against whom the Antitrust Division was still developing evidence.
However, this practice unfairly lumped together the culpable with the un-cooperative and those who were merely "persons of interest" and made it suggest that all those named were equally culpable. Even if employees were carved out for reasons unrelated to culpability, they would often be subject to the perception of criminal activity (and a stigma of guilt) that could cause irreparable harm to their reputation.
The policy change aligns the Antitrust Division's carve-out practice with the Principles of Federal Prosecution, which provide that:
Federal prosecutors must be sensitive to the privacy and reputation of persons who are not charged with an offence.
It is generally inappropriate to disclose the person's identity unless they have been officially charged.
The courts have granted the Antitrust Division's request to file the names of carve-out employees in an appendix under seal in 15 cases as of January 2014.
In recent years, most of the individuals who were indicted by the Antitrust Division and sentenced to prison time were foreign nationals who chose to voluntarily avail themselves to US jurisdiction.
In April 2014, the Antitrust Division announced that it had secured the first-ever extradition of a foreign national to the US on an anti-trust charge. An executive of Parker ITR SRL, an Italian national, was charged with bid-rigging in the marine hose investigation and his custody was transferred from Germany to the US. Historically, the ability of the US to secure extradition has been highly limited because:
Extradition requires dual-criminality, where the conduct in question must be subject to criminal sanctions in both the extraditing and receiving states.
Other countries have been slower to criminalise anti-trust violations.
This limitation was evident in 2009, when the DOJ attempted to obtain the extradition of a British national for alleged price-fixing activity in a carbon products cartel. The British court ultimately declined to extradite the individual on price-fixing charges because the activity was not a criminal offence in the UK at the time of the alleged conduct, but agreed to extradite him for obstruction of justice.
In contrast, as bid-rigging is a criminal offence under German law, the German court faced no such difficulties in extraditing the executive of Parker ITR SRL to face anti-trust criminal charges in the US under the US-German extradition treaty. The executive later pleaded guilty and was sentenced to serve two years in prison with credit for the period he was held in custody in Germany. This marks a growing trend towards increasingly aggressive cross-border co-operation between criminal anti-trust enforcers.
Because it grants only one corporate leniency per application, the leniency programme rewards the company that is the first to contact the Antitrust Division to disclose a violation. Therefore, if a decision to seek leniency is made, the initial contact with the Antitrust Division should typically occur as promptly as possible after the violation is discovered.
The Antitrust Division has reported that, in some instances, the second company to enquire about leniency has been beaten by a prior applicant by a matter of days or even hours. Because gathering all of the facts relating to a violation takes time, the Antitrust Division has implemented a marker system, which facilitates early contact with the Antitrust Division by giving an applicant a period of time to complete its internal investigation after making an initial approach (see Question 9, Markers).
Applications for leniency can only be made to the DOJ.
Counsel representing the potential applicant should make the initial contact with the Antitrust Division orally (see Question 16, Domestic submissions and domestic discovery).
It is possible to approach the Antitrust Division on a confidential, no-name basis and receive informal guidance as to whether leniency is available in relation to a particular market.
Form of application
There is no particular form of application. Counsel for the potential applicant should make the initial contact orally.
The Antitrust Division frequently gives a leniency applicant a marker for a set period of time to hold its place at the front of the line for leniency while counsel gathers additional information through an internal investigation to perfect the company's leniency application. While the marker is in effect, no other company can move up the line ahead of the applicant that has been granted the marker.
The amount of time granted to the company to conduct its internal investigation and perfect its marker depends on the particular situation, including whether other targets are also co-operating with the DOJ. For example, for the first-in applicant, a 30-day marker is common, particularly in situations where the Antitrust Division is not yet investigating the wrongdoing. If necessary, the marker may be extended at the Antitrust Division's discretion for an additional fixed period as long as the applicant demonstrates it is making a good-faith effort to complete its application.
To obtain a marker, counsel for an applicant must:
Report that he has uncovered some information or evidence indicating that his client has engaged in a criminal anti-trust violation.
Disclose the general nature of the conduct discovered.
Identify the industry, product or service involved in terms that are specific enough to allow the Antitrust Division to determine whether leniency is still available and to protect the marker for the applicant.
Identify the client (although it is also possible to place a marker for an anonymous client, in which situations the Antitrust Division may give counsel a few days to gather additional information and report the client's identity).
The applicant must provide full, continuing, and complete co-operation during the course of the Antitrust Division's investigation. A model leniency letter, available on the Antitrust Division's website at www.justice.gov/atr/public/criminal/239524.pdf, suggests that this commitment implies the provision of a wide range of information regarding the industry and the applicant's participation in the cartel. Applicants are expected to:
Provide a full description of all facts known to the applicant relating to the anti-competitive activity being reported.
Provide promptly, and without requirement of subpoena (that is, a writ to compel testimony by a witness or production of evidence under a penalty for failure), all documents, information, or other materials in the applicant's possession, custody, or control, wherever located, not privileged under the attorney-client privilege or the work-product privilege, requested by the Antitrust Division.
Use its best efforts to secure the on-going, full, and truthful co-operation of the current directors, officers, and employees of the applicant, and encourage such people to voluntarily provide the Antitrust Division with any relevant information they may have.
Facilitate the ability of current employees to appear for such interviews or testimony that the Antitrust Division may require.
Use best efforts to ensure that current employees who provide information to the Antitrust Division respond completely, candidly, and truthfully to all questions asked in interviews, in grand jury appearances, and at trial.
Use best efforts to ensure that current directors, officers, and employees who provide information to the Antitrust Division make no attempt to either falsely protect or falsely implicate any person or entity.
Make all reasonable efforts, to the satisfaction of the Antitrust Division, to pay restitution to any person or entity injured as a result of the anti-competitive conduct.
Under the leniency programme, an applicant must admit its participation in a criminal anti-trust violation before the conditional leniency letter (see Question 10) is issued.
Oral statements are accepted (see above, Applicant).
There is no particular timetable for the leniency application process. Typically, an application goes through the following steps:
Initial contact with the Antitrust Division. During this discussion, the Antitrust Division indicates whether leniency is still available, and the applicant can place down a marker.
The applicant completes its internal investigation, gathering together its facts and witnesses.
The applicant provides the Antitrust Division with a proffer, which gives an overview of the key evidence that the applicant can provide to the Antitrust Division. Following that, the applicant can provide additional evidence and arrange for witness interviews at the Antitrust Division's request.
If the Antitrust Division is satisfied with the applicant's showing, it gives the applicant a letter stating that it has been accepted into the Corporate Leniency programme on the condition that it satisfy its co-operation obligations (conditional leniency letter).
After the co-operation obligations are met (typically when the investigation is concluded), the applicant is given a letter indicating that the leniency application has been granted (final leniency letter).
Withdrawal of leniency
Leniency can be withdrawn if the applicant fails to meet its obligations as set out in its conditional leniency agreement. Before the Antitrust Division makes a final decision to revoke a corporate applicant's conditional leniency, it will notify the applicant's counsel in writing of staff's recommendation to revoke the leniency and provide counsel with an opportunity to meet with the staff and Office of Criminal Enforcement regarding the revocation. While a recommendation to revoke an applicant's leniency is under consideration, the Antitrust Division suspends the applicant's obligation to co-operate so that the applicant does not have to provide evidence that could be used against it should the conditional leniency be revoked. If the Antitrust Division does withdraw leniency, the appropriate avenue for challenging a revocation of a leniency letter is to raise the letter as a defense post-indictment. (See Stolt-Nielsen, S.A. v. United States, 442 F.3d 177, 183-187 (3d Cir. 2006).)
If the Antitrust Division revokes a company's conditional acceptance into the leniency programme, the protection provided to employees no longer exists. However, as a matter of prosecutorial discretion, the Antitrust Division will not elect to prosecute individual employees, provided that:
The employees had fully co-operated with the Antitrust Division prior to the revocation.
In the Antitrust Division's view, the employees were not responsible for the revocation.
(See Scott Hammond & Belinda Barnett, Frequently Asked Questions Regarding the Antitrust Division's Leniency Program and Model Leniency Letters (Nov. 19, 2008), available at www.justice.gov/atr/public/criminal/239583.pdf.)
To date, the Antitrust Division has withdrawn leniency because the applicant failed to meet its obligations in one instance, which involved the marine chemical shipping company Stolt-Nielsen, S.A. There, the leniency agreement was voided because the Antitrust Division alleged that Stolt-Nielsen had not taken prompt and effective action to terminate its participation in the cartel, and because allegedly, it had not provided full and truthful co-operation. The Antitrust Division subsequently brought an indictment against Stolt-Nielsen and two of its former executives. That indictment was later dismissed, the court having found no evidence that the company or its executives had failed to co-operate with the Antitrust Division, that the company terminated its participation in the anti-competitive activity, and that the Antitrust Division had received the benefit of its bargain and had no basis for voiding the leniency agreement.
Scope of protection
The protections of the leniency programme only apply to the infringing conduct disclosed by the applicant. Therefore, if co-operation with the Antitrust Division uncovers other violations not covered by the original grant of leniency, then the applicant can be separately prosecuted for those infringements. However, the Antitrust Division recognises that companies frequently apply for leniency before completing their own internal investigations to ensure their place at the front of the line. As a result, the Antitrust Division may learn from one of the applicant's employees of anti-competitive activity that is more extensive than the conduct originally reported and that falls outside the scope of the conditional leniency letter. In such cases, the leniency coverage will often be expanded to include such conduct, provided that:
The applicant has not tried to conceal the conduct.
The applicant is providing full, continuing, and complete co-operation.
The applicant can meet the criteria for leniency on the newly discovered conduct.
If the newly discovered conduct is part of the original conspiracy reported, the leniency protection for the expanded conduct typically is granted by issuing an addendum. However, if the newly discovered conduct constitutes a separate conspiracy, the new leniency protection would be provided in a separate corporate conditional leniency letter.
The Antitrust Division has also adopted Amnesty Plus and Penalty Plus policies to complement its general leniency programme.
Under Amnesty Plus, the Antitrust Division will give a benefit to a company being investigated for criminal activity in one product market (Market A) for any criminal activity in another product market (Market B) that the company voluntarily discloses, provided that the company meets the requirements for leniency in Market B. The Antitrust Division confers that benefit by considering the company's disclosures in Market B as a mitigating factor when assessing any fine that may be assessed against the company for its criminal activities in Market A.
The size of the Amnesty Plus discount depends on a number of factors, including:
The strength of the evidence provided by the co-operating company in the leniency investigation.
The potential significance of the violation reported in the leniency application, measured in such terms as the volume of commerce involved, the geographic scope, and the number of accomplice companies and individuals.
The likelihood of the Antitrust Division uncovering the additional violation absent the self-reporting.
Of those three factors, the first two are given the most weight.
Under the Penalty Plus policy, if a company in plea negotiations with the Antitrust Division fails to report its participation in a separate anti-trust violation that is subsequently discovered and successfully prosecuted, the Antitrust Division will urge the court to consider the company's failure to report that misconduct as an aggravating factor when sentencing the company.
A successful leniency applicant can receive partial relief from damages exposure in civil actions brought by injured third parties. Under the Antitrust Criminal Penalty Enhancement and Reform Act of 2004, as amended (ACPERA), a successful leniency applicant can be liable for only single damages caused by its own conduct (instead of treble damages with joint and several liability with the other undertakings concerned). However, this benefit is only available if the following conditions are met:
The defendant has entered into a final or conditional leniency agreement with the DOJ Antitrust Division under the Corporate Leniency Policy.
The court in which the civil action is brought determines that the applicant has provided satisfactory co-operation in the civil action. In determining whether the degree of co-operation of the applicant is sufficient, the court may consider the timeliness of the applicant's or its counsel's co-operation with the claimant.
Confidentiality and disclosure
The Antitrust Division does not publicly disclose the identity of a leniency applicant, absent prior disclosure by, or agreement with, the applicant, unless required to do so by court order in connection with litigation.
The Antitrust Division does not disclose the information provided by an applicant, absent prior disclosure by, or agreement with, the applicant, unless required to do so by court order in connection with litigation. Naturally, the Antitrust Division can use that information internally to guide its investigation of other cartel participants.
An applicant can request confidentiality, and the Antitrust Division can be expected to abide by its policy of maintaining that confidentiality, subject to its obligation to disclose confidential information when required to do so by court order in connection with litigation.
Domestic submissions and domestic discovery
Documents and data submitted by counsel to the Antitrust Division can be made subject to discovery in domestic courts. This is one of the reasons why submissions to the Antitrust Division are typically made orally by counsel during the leniency application process.
Domestic submissions and foreign discovery
Documents and data submitted by counsel to the Antitrust Division during the leniency process may be subject to discovery in foreign courts, depending on the applicable laws of those jurisdictions.
Foreign submissions and domestic discovery
Courts in the United States have discretion to limit discovery of information submitted to foreign jurisdictions on the grounds of international comity and undertake a comity analysis that balances competing factors to determine whether foreign submissions can be made subject to discovery.
Some courts have precluded the discovery of leniency materials such as communications with, or reports by, foreign regulators, basing their decisions on comity considerations (see, for example, In re Cathode Ray Tube Antitrust Litig., 2014 WL 1247770 (N.D. Cal. Mar. 26, 2014) (denying plaintiffs' motion to compel production of a confidential European Commission report); In re Payment Card Interchange Fee and Merchant Discount Antitrust Litig., 2010 WL 3420517 (E.D.N.Y. Aug. 27, 2010) (denying plaintiffs' motion to compel production of materials prepared by the European Commission); In re Rubber Chemicals Antitrust Litig., 486 F. Supp. 2d 1078 (N.D. Cal. 2007) (denying plaintiff’s motion to compel production of communications between the defendant and the European Commission pursuant to the leniency program); In re Methionine Antitrust Litig., No. C-99-3491 CRB (SCS) (N.D. Cal. July 29, 2002)).
Other courts, however, have ruled that materials were subject to discovery (see, for example, In re Air Cargo Shipping Antitrust Litig., 2010 WL 1189341 (E.D.N.Y. Mar. 29, 2010) (holding that comity does not weigh against production and that plaintiffs need not first resort to the Hague Convention as required under the French "blocking statute"); In re Vitamins Antitrust Litig., Misc. No. 99-197 (TFH) (D.D.C. Dec. 18, 2002) (holding, however, that "documents that would reveal [a foreign regulator's] negotiating positions and potentially affect [its] ability to negotiate settlements" should not be subject to discovery).
Documents and data submitted to both US and foreign enforcers are subject to discovery in domestic courts.
The Antitrust Division co-operates with other jurisdictions that have appropriate policies in place and have demonstrated effective cartel enforcement. For example, the Antitrust Division co-operates frequently with the European Commission, the Canadian Competition Bureau and other agencies.
It is the policy of the Antitrust Division not to disclose the identity of an applicant to a foreign enforcement agency without that applicant's permission. If a waiver is obtained from the applicant, then the Antitrust Division will seek to "co-ordinate investigative steps, share . . . information provided by a mutual leniency applicant, and co-ordinate searches". (See speech by Scott Hammond, The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades (25 February 2010), available at www.justice.gov/atr/public/speeches/255515.pdf.)
The Antitrust Division's basis for obtaining information from other regulatory authorities comprises treaties or other agreements negotiated with those authorities' home countries.
Proposals for reform
The regulatory authority
US Department of Justice (DOJ) − Antitrust Division, Criminal Enforcement
Head. Brent Snyder, Deputy Assistant Attorney General
Contact details. 950 Pennsylvania Avenue, NW Washington DC 20530 United States
T +1 202 514 3543
F +1 202 307 9978
Responsibilities. Criminal enforcement of US anti-trust laws.
Person/department to apply to. Brent Snyder (Counsel for a potential applicant can contact the DOJ Antitrust Division's Office of Criminal Enforcement in Washington DC (202-514-3543) or one of its field offices).
Procedure for obtaining application documents. Not applicable.
Beau W Buffier
Shearman & Sterling LLP
Professional qualifications. New South Wales, Australia, 1998; New York, US, 2001; Solicitor, England and Wales, 2011
Areas of practice. Anti-trust law and policy.
Heather Lamberg Kafele
Shearman & Sterling LLP
Professional qualifications. Maryland, US, 2008; District of Columbia, US, 2008
Areas of practice. Anti-trust law and policy; anti-trust and IP litigation.
Shearman & Sterling LLP
Professional qualifications. New York, US, 1987
Areas of practice. Anti-trust litigation; criminal law; Foreign Corrupt Practices Act (FCPA).
Shearman & Sterling LLP
Professional qualifications. California, US, 1991
Areas of practice. Litigation; criminal law, regulation and enforcement; international arbitration; anti-corruption and Foreign Corrupt Practices Act (FCPA).