BACKGROUND
1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
The Antitrust Division of the Department of Justice (‘Division’) enforces the leniency policy. It has published both a Corporate Leniency Policy (also known as the ‘Amnesty Programme’) and a Leniency Policy for Individuals. The Division first published the Corporate Leniency Policy in 1978, and revised and adopted a new Corporate Leniency Programme on 10 August 1993. The Division revised the Amnesty Programme in three major respects. First, the amnesty becomes automatic (‘Automatic Amnesty’) if the applicant comes forward before the Division initiates an investigation. In this case, the grant of amnesty is certain and is not subject to prosecutorial discretion. Second, when Automatic Amnesty is not available, the Division may grant amnesty even after it has initiated an investigation, subject to prosecutorial discretion. Third, all employees, directors and officers of a corporation that qualifies for Automatic Amnesty will also qualify for amnesty.
The Division issued its Leniency Policy for Individuals on 10 August 1994.
2. What are the basic tenets of a leniency/immunity programme?
The Corporate Leniency Policy has three basic components.
(i) Automatic amnesty
The Division will automatically grant amnesty if the corporation contacts the Division before the Division has started an investigation and if the corporation satisfies the following six conditions:
(ii) Alternative amnesty
If a corporation comes forward after the Division has initiated an investigation or otherwise does not meet the conditions above, the Division has the discretion to grant amnesty (‘alternative amnesty’). To qualify for alternative amnesty, the amnesty applicant must satisfy the following seven conditions:
(iii) Corporate employee amnesty
Corporate directors, officers and employees will receive automatic amnesty if the corporation qualifies for automatic amnesty. Amnesty, however, is not available to corporate ‘ringleaders.’
The Leniency Policy for Individuals applies to individuals who approach the Division on their own behalf, not as part of a corporate proffer. If the individual comes forward before the Division has received information about the activity, the Division will grant leniency to the individual, provided that the individual reports the activity completely, cooperates fully, and was not the ringleader of the illegal activity.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
Because the Division does not disclose the identities of amnesty applicants without their consent, there are no exact statistics on the number of cartels unveiled and punished since the adoption of the Amnesty Programme. Division officials have reported, however, that while they had received only one amnesty application per year before the 1993 reform, this number has increased to two per month since the revised amnesty programme. (See Scott D Hammond, Director of Criminal Enforcement, Antitrust Division, US Department of Justice, DOJ Cracks Down on Antitrust Penalties Electronic Business, 1 May 2005.) The Division also has reported that, since the 1993 reform, the cooperation of amnesty applicants has led to the collection of over $2bn in criminal fines by the Division and has resulted in scores of criminal convictions. In the past ten years, the Division has reported fines exceeding $10m in 49 cases, and fines exceeding $100m in eight cases, with F Hoffmann-La Roche receiving the largest fine to date, $500m, for its involvement in the vitamin cartel. (See Scott D Hammond An Overview of Recent Developments in the Antitrust Division’s Criminal Enforcement Programme, Presentation before the American Bar Association Midwinter Leadership Meeting (10 January 2004).)
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
The conditions that an amnesty applicant must satisfy are identified in question 2 above. The applicant need not meet evidentiary standards when presenting its application. But the applicant must present enough substantial and direct evidence for the Division to evaluate the application. The Division does not require the applicant to present ‘decisive’ evidence of the existence of a cartel. To the contrary, the Division has made clear that an amnesty applicant who played only a peripheral role in the cartel is a more attractive applicant, as it is less culpable than other members of the cartel though it most likely has less information on the existence of the cartel. (See Scott D Hammond, Detecting and Deterring Cartel Activity Through An Effective Leniency Programme, 21 November 2000.) On the other hand, the Division will not grant amnesty to the ringleader of the cartel.
The Division accepts paperless submissions, allowing applicants to avoid creating documents that could be used against them in a civil case.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
As noted in question 2 above, being first in to cooperate is of paramount importance because amnesty is generally available only to a corporation or an individual that is the first in. While the first amnesty applicant typically pays no criminal fines and its culpable executives are spared criminal exposure, no such accommodations are granted to subsequent applicants. The three most important benefits of being first in to cooperate are that (a) the corporation will not be criminally prosecuted; (b) the individuals within the corporation will not be criminally prosecuted; and (c) the corporation will pay no fines.
Being first in to cooperate is particularly important for the individuals involved in the activity, as it may make the difference between not being prosecuted and being convicted and sentenced to jail. In some cases, the first applicant in the door may provide sufficient information to remove the possibility of a no-jail deal for the executives of a company that is second in the door. In other cases, where the evidence is not as developed, the Division tends to offer no-jail deals deeper into the investigation. (See Statement of Scott D Hammond, When Calculating the Costs and Benefits of Applying For Corporate Amnesty, How do you put a price tag on an individual’s freedom?, speech before 15th Annual National Institute on White Collar Crime, 8 March 2001.)
The Division’s investigation and successful prosecution of the fine art auction case provides a recent example of the benefits of being the first in to cooperate. Christie’s was the first while Sotheby’s was the second to cooperate. The Division did not fine Christie’s, and did not prosecute any of its current executives. In contrast, Sotheby’s pleaded guilty to price fixing, the former CEO, Diana Brooks, pleaded guilty to price fixing, and Alfred Taubman, former chairman of the board, pleaded not guilty, was tried and convicted. Mr Taubman was sentenced to one year and one day in prison, and a $7.5m fine.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
One of the critical differences between the EU and the US leniency regimes is that US Amnesty is available only to the first in to cooperate, while the EU leniency notice provides some forms of leniency to corporations that come forward later in the process. In the US, the second firm in the door – even if only by a few hours – and all of its culpable executives, will be subject to full prosecution. This is critical in cases of two-firm cartels when being second means being last to cooperate. For example, since Sotheby’s was second in the door after Christie’s in the fine art auction case, the Division granted amnesty to Christie’s, while it fully prosecuted Sotheby’s.
In other instances, corporations and individuals that come forward after the leniency applicant and offer to cooperate may enter into plea agreements, but this process falls outside of the Amnesty Programme. Nonetheless, the Division offers compelling incentives to being the second corporation to report. In exchange for prompt and genuine cooperation, the Division will seek minimum sentences or downward departures from the Sentencing Guidelines for both fines and jail time. Firms second to report have received fines for roughly 15 per cent of their respective volume of commerce, whereas firms that cooperate later pay average fines of 25 to 35 per cent of their respective volumes of commerce. In some international cases, where the size of the affected markets are large, the difference between reporting second and third can be tens or hundreds of millions of dollars in fines.
In addition, corporations can benefit from the US Amnesty Plus policy. In 1999, the Division announced that the Corporate Leniency Policy had been extended to include an ‘Amnesty Plus’ provision, under which a corporation may bring evidence of illegal activity in a second market to the Division in exchange for amnesty with respect to that conduct and a reduction in the fine from the first investigation. (See Gary R Spratling, Deputy Assistant Attorney General, Antitrust Division, Making Companies an Offer they Shouldn’t Refuse: The Antitrust Division’s Corporate Leniency Policy – An Update, address before The Bar Association of the District of Columbia’s 35th Annual Symposium on Associations and Antitrust, 16 February 1999.) This policy has generated numerous investigations. The Division has noted that more than half of its investigations in 2004 were initiated as a result of leads generated during an investigation of a completely separate market. (See Scott D Hammond, Cornerstones of an Effective Leniency Programme, address before the ICN Workshop on Leniency Programmes, Sydney, Australia, 22 November 2004.)
Conversely, the Division will punish corporations that are late to cooperate. Corporations that elect not to participate in Amnesty Plus may be subject to the harsh consequences of the ‘Penalty Plus’ policy. If a corporation participated in a second antitrust offence and does not report it and that conduct is later successfully prosecuted, the Division, in appropriate circumstances, will recommend that the sentencing court consider the corporation’s and any culpable executive’s failure to report the conduct voluntarily as an aggravating factor under the US Sentencing Guidelines. For a corporation, the failure to voluntarily report a violation under Amnesty Plus may result in a fine as high as 80 per cent or more of the volume of commerce affected by the second offence as compared with no fine at all for the Amnesty Plus product. For an individual, failing to report under Amnesty Plus may mean the difference between a lengthy prison sentence and avoiding prison altogether. While the Division will negotiate a corporate disposition which will require a larger fine, the culpable officers, directors, and employees will be carved out of the non-prosecution of the plea agreement. These individuals will then have to negotiate separate pleas or be subject to indictment.
In a recent example involving Hoechst AG, the Division asked the court to impose a sentence on the corporation that was roughly 30 per cent above the maximum Guideline fine and 130 per cent above the minimum Guideline fine, as the company was a recidivist antitrust offender. Hoechst ended up paying a fine of $12m, or approximately 70 per cent of the volume of affected commerce. And three Hoechst executives were carved out of the plea agreement.
Finally, the Division’s policy to ask the ‘Omnibus Question’ to all parties should force corporations to benefit from the Amnesty Plus option. The Division will ask executives who are subpoenaed and compelled to provide sworn testimony under penalty of perjury whether they have any information of any cartel activity in any other markets as well as the market under investigation. The Division will also ask this question to the amnesty applicant.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
As noted in question 6 above, there are material benefits to reporting early in an antitrust investigation. Although amnesty is offered only to the first in the door, the Division may offer reduced sentences and fines when it receives previously unknown and useful information, especially when this information comes early. Moreover, sanctions for those who report later in the process have grown significantly over the years.
For example, Showa Denko Carbon Inc, the Japanese firm that was second to report in the graphite electrodes investigation, received fines of $32.5m or roughly 10 per cent of its volume of affected commerce. In contrast, SGL Carbon AG (‘SGL’), the German-based corporation that reported last, received fines of $135m or close to 30 per cent of its volume of affected commerce. SGL was, in fact, eligible for higher penalties, but received a reduction under the Sentencing Guidelines because of its inability to pay the full fine.
While the Division has not defined what ‘useful contributions’ are, the corporations who report late in the process are unlikely to assist the Division in mounting a case, and are unlikely to convince the Division that it should recommend reduced sentences and fines.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
Yes, as noted above in question 2, it is possible to receive full leniency. The main requirement for amnesty is to be ‘first in’ to cooperate.
9. How many companies have received full immunity from fines to date?
As noted above in question 3, the Division does not disclose who has applied for amnesty, unless the amnesty holder has granted consent. Thus, the Division has not published the number of successful leniency applicants. However the Division has noted that it had received approximately two amnesty applications per month since the 1993 reform of the Amnesty Programme.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
Once the corporation uncovers an illegal activity, and completes a preliminary investigation that convinces it that it wishes to apply for leniency, the process will usually progress in five phases. First, the corporation’s counsel will informally contact the Division to inquire whether Amnesty is available and to apply for a marker to save the corporation’s place in line. Second, the corporation’s senior management and outside counsel will meet with the Division’s staff and present the corporation’s proffer of evidence. Third, the Division will grant conditional Amnesty to the corporation. Fourth, the Division will launch a thorough investigation to confirm the statements made by the corporation in its proffer of evidence. Fifth, once the matter is completed, the Division will grant the successful applicant a final amnesty letter.
The application for a marker
Because time is of the essence for amnesty applicants, the Division allows potential applicants to contact it to ‘put down a marker’ before providing substantial evidence that they should qualify for leniency. The date of this ‘marker’ is the official date on which the cartel members have contacted the Division. This allows amnesty applicants to secure their place in line and ensure that they can benefit from amnesty.
While it is critical to put down a marker quickly, corporations should conduct a quick internal investigation before deciding to contact the Division. Amnesty applicants should carefully consider the scope of the marker. Putting down a marker that is too narrow in scope will not shield the applicant from activities it has not reported and putting down too broad a marker may lead the Division to expect information that will not be forthcoming. The Division, however, often expands the scope of the protection if the applicant’s investigation unearths additional offences that were not reported when the applicant put down its marker.
After the applicant puts down a marker, the Division will then give the amnesty applicant a period of time to complete its internal investigation and present a proffer of evidence. This period of time may vary from a few days to several weeks, depending on the scope, complexity and circumstances of the case. It will also vary on whether the Division has initiated an investigation. The period of time will be longer if the Division has not initiated an investigation. It will be shorter, or the marker may not be available at all, if the Division has initiated an investigation. If the company fails to present its proffer of evidence within the time allocated by the Division, it risks losing its place in line and other companies will be considered for amnesty in the order in which they placed their markers.
The proffer of evidence
To ensure that it meets the conditions necessary to obtain amnesty, the applicant must make a thorough and detailed proffer of the evidence that the corporation or individual seeking amnesty will provide. Counsel typically makes this proffer in person with the Division’s staff. The proffer should contain the most important facts and refer to the documents and facts that emerged during the corporation’s internal investigation. To avoid having to produce a written proffer document to plaintiffs in private litigation, the applicant can make the proffer orally before the Division’s staff. An effective proffer can take several days to complete.
Conditional amnesty letter
After the proffer, if the Division decides to grant leniency, it will send conditional amnesty letters to the amnesty applicant. In 1998, the Division issued model amnesty letters for corporate and individual defendants and posted them on its website. These letters are conditional on the applicant’s performance of certain obligations over time, such as cooperating with the Division and making restitution. These letters are also contingent on the Division’s investigation of the facts presented in the proffer.
Division investigation
The next step will be for the Division to conduct a thorough investigation of the facts presented in the proffer. The amnesty applicant will respond to the Division’s inquiries, provide witnesses, and provide full and general cooperation with the Division’s investigations.
Amnesty applicants should understand that this process can place a significant burden on the corporation’s senior management, who should make themselves available to respond to the Division’s requests. In many instances, this process will cause a significant disruption in the corporation’s activities. The senior management of the corporation must take this obligation to cooperate fully seriously, as it is a prerequisite to receiving amnesty, and failure to cooperate fully could cause withdrawal of amnesty.
The amnesty applicant, however, is not required to waive its attorney-client or work product privilege.
Final amnesty letter
After the Division concludes its investigation and closes the matter, it issues a final amnesty letter confirming that amnesty has been granted. This letter is binding on the Division.
11. Is there an optimal time to approach the regulatory authority?
The best time to approach the Division is as soon as practicable, and as soon as the corporation has preliminarily evaluated its exposure. Clearly, a corporation or individual is always in a better position to negotiate while the Division is mounting its case rather than when it is near the end of its investigation. However, before approaching the Antitrust Division, a corporation should already have completed an internal investigation, in which implicated corporate employees have fully cooperated, so that it has sufficient evidence to present to the Division to support its application. In addition, corporate management must support the decision to seek amnesty.
Amnesty applicants in the United States should evaluate whether they need to seek leniency in other countries as well, most notably in the European Union and Canada. If the activity discovered has worldwide effects, the US amnesty applicant should probably also seek amnesty in other jurisdictions.
12. What guarantees of leniency exist if a party cooperates?
As noted in question 10 above, a final accepted amnesty is binding on the Division. Since 1993, the Division revoked amnesty in only one case, that of Stolt Nielsen. In March 2004, the Division revoked the conditional amnesty in the Stolt-Nielsen case after it learned that top Stolt-Nielsen executives, including its managing director, had continued to meet with competitors and participate in the conspiracy for months after the discovery of the conspiracy by Stolt-Nielsen’s then-general counsel. The Division also claimed that Stolt-Nielsen had both withheld and provided false and misleading information about the true extent of the conspiracy.
In February 2004, Stolt-Nielsen filed lawsuits seeking an injunction to prevent the Division from revoking the amnesty. The US District Court for the Eastern District of Pennsylvania granted the injunction in January 2005. In March 2006, the Court of Appeals for the Third Circuit reversed the District Court decision and, in June 2006, denied petitions for rehearing. Attempts by Stolt-Nielsen to recall and stay the mandate of the Third Circuit failed, and on 24 August 2006, the District Court dissolved the injunction against the Division. Assistant Attorney General for Antitrust Thomas Barnett commented that: ‘Stolt-Nielsen is the first company to have its conditional leniency revoked since the current program was announced in 1993, (…) [r]emoving a company from the Corporate Leniency Program is not something the Division takes lightly but regrettably was necessary in this case to maintain the integrity of the program, which requires that those in the program provide full and truthful cooperation.’
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
The Division treats as confidential both the identity of the amnesty applicant and any information obtained from that applicant. The Division will not disclose an amnesty applicant’s identity, absent prior disclosure by or agreement with the applicant, unless authorised by court order. This gives the amnesty applicant some time to prepare its restitution strategy, and to try to limit the scope of the private lawsuits by individually negotiating with the victims of the illegal activity. Further, the Division will not disclose the amnesty applicant’s identity or information obtained from an amnesty applicant to foreign authorities without prior agreement with that applicant. This is an important inducement for amnesty applicants because foreign enforcement authorities are increasingly scrutinising international cartels. This also gives the amnesty applicant some additional time to consider whether it wishes to apply for leniency in other jurisdictions. (See Gary R Spratling,
Negotiating the Waters of International Cartel Prosecutions: Antitrust Division Policies Relating to Plea Agreements in International Cases, address to the ABA’s Criminal Justice Section, 13th Annual National Inst on White Collar Crime at 10-12, 4 March 1999.)
Notwithstanding this policy, the Division has frequently obtained waivers on sharing information with a jurisdiction from which the applicant has also sought and obtained leniency.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
As noted in question 2 above, all directors, officers, and employees of the corporation who admit their involvement in the activity of a corporate defendant that is granted Automatic Amnesty are also granted leniency as long as those employees are not corporate ‘ringleaders.’ Provided that the employees admit their wrongdoing and fully cooperate, they will not be charged criminally and will not pay a fine for their involvement in the activity.
If a corporation does not qualify for Automatic Amnesty, the directors, officers and employees of the corporation who come forward with the corporation will be considered for immunity from criminal prosecution on the same basis as if they had approached the Division individually.
Moreover, individuals can gain significant benefits from cooperating with the Division, even when the Division refuses to grant individual amnesty. As discussed in question 6 above, the Division will negotiate plea agreements and recommend no or reduced jail sentences if the individuals cooperate with the investigation. This can be particularly beneficial to cooperating foreign nationals. To ensure that a criminal conviction does not result in deportation and permanent exclusion from the United States of a cooperating foreign national, in 1996 the Division entered into a Memorandum of Understanding with the Immigration and Naturalization Service (‘MOU’), which provides the pre-adjudication of cooperating individuals’ immigration status before they enter into plea agreements with the Division. Therefore, the MOU gives cooperating foreign nationals written assurance in their plea agreements that their convictions will not be used by the INS as a basis to deport or exclude them from the United States.
In contrast, as noted in question 6 above, not requesting amnesty or being late to cooperate with the Division can have devastating effects on the corporation’s employees. When individuals are carved out of the non-prosecution of the corporate agreement, they face indictment and jail terms. If foreign national culpable individuals remain outside the United States, they run the risk of becoming international fugitives. In 2001, the Division adopted a policy of placing indicted fugitives on a ‘Red Notice’ watch-list maintained by INTERPOL. A red notice watch is essentially an international ‘wanted’ list that, in many INTERPOL-member nations, serves as a request that the subject be arrested, with a view towards extradition. As such, the individuals could be arrested, detained, and held for trial if they travel to or through the United States or one of its territories. Moreover, they could be arrested, detained, extradited to the United States, and held for trial if they travel to or through any one of the countries with which the United States has an extradition treaty covering antitrust crimes. This possibility was recently highlighted by a UK District Court Judge in the Morgan Crucible price-fixing case. On 1 June 2005, UK District Court Judge Nicholas Evans ruled in favour of the Division in connection with its request to extradite Ian Norris, a British citizen and the former CEO of The Morgan Crucible Company plc, on price-fixing charges. Judge Evans held that price fixing was an extraditable offence and sent the case to the UK Secretary of State, who will decide whether to extradite Ian Norris. If the Division succeeds in its action, it will be the first time that the Division has successfully extradited a foreign national on price-fixing charges.
15. Does leniency bar further criminal or private enforcement?
The Amnesty Programme protects applicants from federal enforcement actions only. State Attorneys General are in no way prohibited from enforcing state antitrust provisions. More importantly, the Amnesty Programme does not protect a company from exposure to private, civil treble damages actions under section 1 of the Sherman Act. An Amnesty applicant should try to understand this exposure before applying for amnesty before the Division, or otherwise seeking leniency in other jurisdictions.
To the contrary, private litigants will invariably sue following announcements of guilty pleas, and often sue following the mere announcement of investigations or dawn raids by the Division or foreign competition authorities. The major disincentive to seek Amnesty is the virtual certainty that private action will follow. While the Amnesty holder is not prosecuted by the Division, plaintiffs will know the identity of all market participants and name all participants in damages actions. For example, while Rhone Poulenc SA received Amnesty in the vitamin cartel, it paid $86.8m to food and animal-feed companies to settle a follow-on class action lawsuit. Thus, the Amnesty applicant will most likely have to defend class action lawsuits from direct purchasers in federal courts, class action lawsuits from indirect purchasers in state court, and opt out actions in state and federal courts.
Class actions
The US statutory scheme strongly favours private enforcement. Section 4 of the Clayton Act provides that victims of antitrust violations can recover treble damages. Plaintiffs can also recover attorney fees, and bring a suit on behalf of the class of purchasers injured by the cartel. A class action is a procedural device available in federal and state courts that, if certain prerequisites are established, allows one or more persons or entities to sue on behalf of a large class of similar plaintiffs. Federal cases are governed by Federal Rule of Civil Procedure 23, which generally requires plaintiffs to establish that: (i) the class is so numerous that joinder of all members as plaintiffs is impracticable; (ii) there are questions of law or fact common to the class; (iii) the claims of the named plaintiffs are typical of the claims of the class; and (iv) the representative plaintiffs will fairly and adequately represent the interests of the class. In many cases, plaintiffs must also establish either that: (i) defendants have acted on grounds generally applicable to the class, making appropriate injunctive or declaratory relief with respect to the class as a whole; or (ii) questions of law or fact common to members of the class predominate over questions affecting only individual members, and a class action is superior to other methods for the fair and efficient adjudication of the controversy.
Class actions frequently are employed in cartel cases because the claims lend themselves to satisfying the prerequisites for class certification. The class (all purchasers) frequently is quite numerous, the same activity by defendants is at issue with respect to the claims of all members of the class, and all members of the class suffer the same kind of harm – higher prices. In addition, the plaintiffs’ bar favours prosecuting cases as class actions because named plaintiffs are often passive parties. More importantly, courts typically award attorneys’ fees to plaintiffs’ counsel where cases are won or settled, and the large number of plaintiffs in a class generally creates a large amount of potential damages, which results in the award of millions of dollars in attorneys’ fees. For example, the settlement agreement in the vitamins cases awarded $122.4m in attorneys’ fees.
Prima facie effect to convicted co-conspirators
The criminal convictions that amnesty applicants have helped to secure will serve as prima facie evidence in the follow-on civil trials. If a defendant loses an antitrust case that was brought by the Division, the defendant cannot require the follow-on private plaintiffs to prove the case on the merits. Section 5(a) of the Clayton Act, 15 USC s16(a) (2000), provides that a judgment against a defendant in an action brought by the United States is admissible as prima facie evidence of the matters decided in subsequent private antitrust suits. While there will be no prima facie effect towards the Amnesty holder, since it was not found guilty, this statutory scheme incentivises the plaintiff bar, and pushes convicted defendants towards quick settlements.
Direct/indirect purchasers distinction
In addition to defending federal suits brought by direct purchasers, defendants will have to defend state suits brought on behalf of indirect purchasers. The US Supreme Court laid down a bright-line rule 25 years ago in Illinois Brick Co v Illinois, 431 US 720 (1977): only those who have purchased directly from a member of a price-fixing conspiracy or a monopolist can assert claims from overcharge damages caused by that conduct. Indirect purchasers cannot assert damage claims under federal law. Indirect purchasers, however, can bring damages claims in state court under a growing number of state laws. A number of states have enacted local laws, commonly called ‘Illinois Brick repealers,’ which expressly provide that indirect purchasers may recover overcharge damages. In other states, local courts have interpreted existing statutes to encompass indirect purchaser claims. As a result, a large number of indirect purchaser lawsuits are now being litigated in diverse state courts, and a company considering entering the Amnesty Programme has to factor in the prospect of civil treble damages both at the federal level for direct purchasers, and at the state level for indirect purchasers.
Opt-out actions
Finally, defendants will also have to defend actions brought by individual victims of the conspiracy who decided to opt out from the class action.
The Antitrust Criminal Penalty Enhancement and Reform Act of 2004
The Bush administration has recognised that the strength of private enforcement may create a disincentive for companies to apply for amnesty. On 22 June 2004 President Bush signed into law the National Cooperative Standard Development Act. Title II of the Act, the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (PL 108-237, 118 Stat 661, amending 15 USC ss 1-3 (2005) (the 2004 Act)) strengthens the Amnesty Programme by ‘de-trebling’ damages that the Amnesty holders must pay in civil litigation. This de-trebling is meant to increase a corporation’s incentives to enter into the amnesty programme. The 2004 Act reduces the amnesty holder’s civil antitrust liability from treble to single, in both federal and state litigation, if the applicant also provides ‘satisfactory cooperation’ to the civil plaintiffs.
The 2004 Act provides the following list of what will constitute ‘satisfactory cooperation’ in civil cases:
Because it will be up to the courts to decide whether the amnesty holder has provided satisfactory cooperation, it is unclear whether this amendment will affect litigation strategies. Practically, such determination is made at the end of a trial, after the defendants have had to incur a significant burden and costs. While the 2004 Act does not relieve defendants of this burden, it may facilitate and accelerate settlement negotiations in civil litigations, and may lower the cost of these settlements. Indeed, and even before the 2004 Act, parties to price-fixing settlements typically negotiate and settle on the basis of single, and not treble, damages estimations.
REFORM/LATEST DEVELOPMENTS
16. Is there a reform underway to revisit the leniency policy? What are the latest developments?
There is no reform of the Amnesty Programme underway. The 2004 Act, however, has further strengthened the Amnesty Programme by raising the maximum sanctions for antitrust offences. The 2004 Act increased the maximum jail term under 15 USC s 1 from three to ten years, the maximum individual fine from $350,000 to $1m, and the maximum corporate fine from $10m to $100m. This brings the penalties for antitrust offences more in line with those for other white collar offences.
