United States: How To Respond To A Criminal Antitrust Investigation: A Practical Approach In Today’s Enforcement Environment Part 2 of 2

D. Contact Others in the Industry Who May Have Received a Subpoena to Form a Joint Defense Arrangements

1. Sharing Information and Resources Among Joint Defense Counsel Can Be Essential to Adequate Defense Preparation.

a. Sharing information allows counsel to assess the strength and substance of the government’s case at an early stage, and enables counsel to monitor and evaluate the government’s case as it develops.

b. In addition, sharing information and resources may provide cost savings and efficiencies with regard to attorney time and the use of experts and other consultants.

2. The Joint Defense or "Common Interest" Privilege Protects the Confidentiality of Information and Resources Shared Among Joint Defense Counsel. a. An extension of the attorney-client privilege and work product doctrine, the joint defense or "common interest" privilege protects from disclosure communications and work product among parties and their respective counsel, made in the course of a common effort, and to further a common interest. See, e.g., In re Grand Jury Subpoena, 415 F.3d 333, 341 (4th Cir. 2005).

b. The "common interest" privilege also protects attorneys’ work product. Aronson v. McKesson HBOC, Inc., 2005 WL 934331, at *7 (N.D. Cal. 2005) (work product protection is preserved where documents shared among parties with a common interest).

3. Bases for Invoking the "Common Interest" Privilege.

a. Parties seeking to invoke the privilege must establish all of the elements of the attorney client privilege, and that "(1) the communications were made in the course of a joint defense effort; the statements were designed to further that effort; and (3) the privilege has not been waived." In re Bevill, Bresler and Shulman Asset Mgmt. Corp., 805 F.2d 120, 126 (3d Cir. 1986).

b. Most courts require the parties’ interests to be identical or nearly identical. See In re Doe, 429 F.3d 450, 453 (3d Cir. 2005); FDIC v. Ogden Corp., 202 F.3d 454, 461 (1st Cir. 2000).

c. The privilege requires that a communication be made with an intention that it be held confidential. United States v. Schwimmer, 892 F.2d 237, 244 (2d Cir. 1989).

d. The communications must have been made for the purpose of furthering the parties’ common legal interests. Schwimmer, 892 F.2d at 243; United States v. Moss, 9 F.3d 543, 550 (6th Cir. 1993).

e. The privilege may be waived if the communication is shared with third parties, see, e.g., United States v. Lopez, 777 F.2d 543, 553 (10th Cir. 1985), but one party to a common interest may not unilaterally waive the privilege. In re Grand Jury Subpoenas, 902 F.2d 244, 248-250 (4th Cir. 1990).

4. Committing Joint Defense or "Common Interest" Agreements to Writing.

a. A written agreement does not by itself create any protections or privileges and may be narrowly construed. A written agreement, however, may serve as evidence of parties' intentions with respect to confidentiality and commonality of interest. Whether or not it is written, the agreement should include a reservation of the right to assert separate defenses or go separate ways.

b. Proof of intent. Although not a prerequisite to the "common interest" privilege, a formal written agreement between or among participants may be necessary to prove the parties' intentions with respect to confidentiality and commonality of interest. Indeed, some courts have denied the privilege because the party asserting the privilege could not prove the existence of an agreement to join interests. See, e.g., In re Bevill, Bresler & Schulman Asset Mgmt. Corp., 805 F.2d at 126 (holding that the party asserting the privilege had failed to show evidence that the parties agreed to pursue a joint defense strategy); United States v. Sawyer, 878 F. Supp. 295, 297 (D. Mass. 1995) (involving a party who admitted a lack of a formal joint defense agreement, and failed to provide sufficient evidence to allow the court to find that the parties intended to enter into such an agreement).

c. Timing. Participants should enter into a "common interest" agreement before disclosing any confidential information to another party. This allows counsel to later demonstrate, if necessary, that the communications were made pursuant to, and in furtherance of, an agreed upon common interest. Wilson & Houlding, supra, at 453.

d. Substance. The following elements should be considered for inclusion in the written agreement to maintain the "common interest" privilege:

(1) the identity of those participants entering into the agreement, and the identity of their counsel;

(2) a description of the participants' common legal interest(s);

(3) the types of information covered by the agreement, for example, the substance of contacts and communications with the government, witness interviews, debriefing memoranda, documents produced pursuant to subpoena, legal research, strategic analyses, and expert analysis and reports;

(4) an explicit statement of confidentiality; that is, that communications and resources shared among the participants and their counsel are confidential, and that the participants and their counsel expect that the communications and resources will remain confidential;

(5) the processes for maintaining the confidentiality of information communicated to third parties necessary to the common legal effort, such as expert witnesses;

(6) an acknowledgment that the participants are each represented solely by their respective counsel, and that none of the participants are represented by counsel for any other participant;

(7) a statement of the processes required to terminate participation in the agreement, the processes required for the return of any confidential information released pursuant to the agreement, and the processes required to continue the withdrawing participant's obligation to keep confidential information received while a participant;

(8) the circumstances where participants may use their own confidential information to further the common interest, or to further adverse interests; and

(9) a waiver by participants of both any conflicts of interest claims, and of their rights to later disqualify an attorney receiving confidential information pursuant to the agreement.

Wilson & Houlding, supra, at 453-54.

E. Special Considerations For Joint Defense or "Common Interest" Agreements in the International Cartel Context

1. Joint defense efforts in connection with international cartel investigations typically require communication among multinational corporate defendants, and U.S. and foreign outside and in-house counsel.

2. In the United States, the attorney-client privilege protects confidential communications made between privileged persons to obtain or provide legal advice. The privilege applies to communications with U.S. in-house and outside counsel. See, e.g., Upjohn Co. v. United States, 449 U.S. 383, 397 (1981) (recognizing communications between corporate employees and in-house counsel as privileged).

3. The scope of the privilege where the communications are between corporate defendants and foreign counsel is uncertain.

a. The few federal decisions that have addressed this issue have asked whether the communication "touches base" with the United States.

b. According to the "touch base" approach, "any communication touching base with the United States will be governed by the federal discovery rules, while communications related to matters solely involving [a foreign country] will be governed by the applicable foreign standard." Golden Trade, S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 520 (S.D.N.Y. 1992) (applying the "touch base" approach to communications with foreign patent agent). See also In re Philip Services Corp. Securities Litig., 2005 WL 2482494, at *1 (S.D.N.Y. 2005); Tulip Computers, Int’l, B.V.. v. Dell Computer Corp., 210 F.R.D. 100, 104 (D. Del. 2002).

c. If the communication "touches base" with a foreign country and is privileged under that country’s laws, federal courts have recognized the communication as privileged. See, e.g., Renfield Corp. v. E. Remy Martin & Co., S.A., 98 F.R.D. 442, 444 (D. Del. 1982) (communication with French in-house counsel privileged); In re Ampicillin Antitrust Litig., 81 F.R.D. 377, 391-93 (D.D.C. 1978) (communication with British patent agent privileged).

5. The fact-intensive analysis required by the "touch base" approach makes it difficult for counsel to predict whether a federal court will recognize a communication between foreign counsel and a corporate defendant as privileged, and thus presents a thorny problem for counsel wishing to participate in joint defense agreements in the international cartel context.

7. A further complication is the uncertainty over the application of the attorney-client privilege to foreign in-house counsel. Although most countries recognize the general principle of the attorney-client privilege (see Julian D. Nihill, Corporate Counsel, 31 INT’L LAW. 245, 247 (1997)), many do not recognize communications between in-house counsel and their corporate employers as protected by the privilege. See, e.g., Mary C. Daly, The Cultural, Ethical, and Legal Challenges in Lawyering for a Global Organization: The Role of General Counsel, 46 EMORY L.J. 1057, 1103-04 (1997).

a. For example, in the member states of the European Union, the attorney-client privilege is "generally recognized"; however, the scope and application of the privilege varies among the member states, and often does not apply to in-house lawyers. AM&S Europe Ltd. v. Commission of the European Communities, Case 155/79, 1982 E.C.R. 1575, 1611. See generally J. Triplett Mackintosh & Kristin M. Angus, Conflict in Confidentiality: How E.U. Laws Leave In-House Counsel Outside the Privilege, 38 INT’L LAW. 35 (2004).

b. In Japan, the attorney-client privilege was acknowledged by statute under the 1996 Civil Procedure Law. According to the law, any documents "containing information obtained through the conducting of business by * * * [an] attorney * * * for which confidentiality has not been waived shall not be subject to submission to a court." Nihill, supra, at 255 (citing Article 220.4 of the Civil Procedure Law of Japan (1996 Legislation Number 109)).

(1) In Japan, because the scope of discovery is limited, the attorney-client privilege has not been an important issue and as a result there has been little case law setting forth the governing principles.

(2) It is therefore difficult to discern whether the Japanese attorney-client privilege applies to communications between in-house counsel and their corporate clients.

8. In sum, in the international cartel context it is important to be aware of the potential impact of these privilege issues and ensure that all persons participating in and privy to joint defense communications are covered by the privilege.


A."Target" Letters

1. Individuals.

a. Division practice is to notify counsel in writing when individuals become "targets" of an investigation, and "target" letter generally includes an offer to appear before the grand jury. b. "Target" letters signal that the staff is seriously considering recommending the individual for indictment by the grand jury. Corporations. a. Similar notification is provided to company counsel when the Division is seriously considering recommending the corporation for indictment.

B. Opportunities for Presentations to the Government to Argue Against Indictment 1. Meeting with the Government.

a. Counsel may request a meeting with the staff and the section, bureau or field office chief to argue against indictment or for a narrowing of the scope of the potential charges/allegations. Counsel may also request a meeting with the Deputy Assistant Attorney General for Criminal Enforcement of the Antitrust Division, but should do so only after first meeting and discussing issues with the staff.

2. Purpose of Pre-Indictment Meetings.

a. Not an open forum to debate the facts (especially in criminal cases), because staff and senior decisionmakers are precluded from disclosing many factual details of the case pursuant to the secrecy provisions of Rule 6(e).

b. Opportunity to present your best arguments against a criminal case; you should consider:

(1) Presenting an overview of major evidentiary arguments you would expect to advance at trial and key facts you think are determinative;

(2) Make staff or agency decisionmakers aware of compelling evidence they may not have in their possession; and

(3) Summarize mitigating and other equitable factors applicable to your client (e.g., age, poor health, low-level education or intelligence, minor role in violation, unequal treatment of potential defendants, treble damage litigation).

C. Negotiating a Plea Agreement

1. If your client is not inclined to cooperate or is not a likely candidate for lenient treatment, but would like to settle the matter, you should enter into plea negotiations with the government generally at an early time, since the value of cooperation may decline significantly if other targets enter into plea agreements first.

2. Division policy is not to entertain requests for immunity for individuals at a late stage in an investigation, and you should advise individual clients to expect the government to insist on entering a guilty plea to a felony charge.

3. Several factors must be considered apart from the fine or term of imprisonment:

a. Type of plea, guilty or nolo.

b. Scope of charges.

(1) one or more counts of Sherman Act violations;

(2) possible inclusion of other ancillary charges, such as mail or wire fraud, perjury, obstruction of justice; and

(3) geographic.

c. The type of plea agreement under Fed. R. Crim. P. 11 is also an important aspect to be negotiated:

(1) "A" agreement: government promises to move for dismissal on fewer than all pending charges.

(2) "B" agreement: government agrees to recommend, or agrees to not oppose, your client's request for a particular sentence.

(3) "C" agreement: government agrees on the specific sentence that is appropriate and it is presented jointly to the court.


Traditionally, one of the most important factors in negotiating an individual or corporate plea agreement has been the impact of the Sentencing Guidelines. Under United States v. Booker, 125 S. Ct. 738 (2005), imposition of a sentence within the range provided by the Sentencing Guidelines is no longer mandatory in federal criminal cases, but they still can be used in an advisory manner. Although the full import of Booker in antitrust cases has yet to be determined, the Antitrust Division has announced that the decision will not result in a major change in its practice. The Division will continue to seek Guidelines sentences "because they have promoted consistency, fairness, and transparency in sentencing." Scott D. Hammond, "Antitrust Sentencing in the Post-Booker Era: Risks Remain High for Non-Cooperating Defendants," Remarks Before the ABA Section of Antitrust Law, Spring Meeting (March 30, 2005), available at http://www.usdoj.gov/atr/public/speeches/208354.htm.

As a result, counsel representing a corporate or individual client considering a plea agreement still must be intimately familiar with the Sentencing Guidelines. In deciding whether to offer a plea and what plea is acceptable, the Division will have in mind the range of penalties (both custodial and monetary) it reasonably could expect to obtain under the Guidelines if the case went to trial. Counsel should, therefore, conduct an analysis of the range of potential individual and corporate penalties as early in the investigation as is practicable. Frequently, counsel can obtain information relevant to the sentencing determination – such as volume of sales of the relevant product, size of the corporation, and past criminal history of individuals – very early in the process. As other factors relevant to sentencing, such as cooperation and acceptance of responsibility, become apparent in the course of the investigation, the sentencing analysis can be refined.

A. Corporate Fines.

1. Under amendments to the Sherman Act effective June 22, 2004, the maximum fine for a corporation is $100 million. See Antitrust Criminal Penalty Enhancement and Reform Act of 2004, P.L. 108-237, § 215(a), amending 15 U.S.C. § 1.

a. Under 18 U.S.C. § 3571(d), there is an "alternative fine" for all federal pecuniary offenses equal to twice the pecuniary gain derived from the crime, or twice the pecuniary loss to the victims. This provision allows the Antitrust Division to obtain a fine that exceeds the statutory maximum, and the Division has done so on several occasions in recent years.

b. Because of the recent increase in the maximum fine, the Division likely will seek a fine in excess of the maximum only in very large cartel cases.

c. It may not be necessary to calculate the pecuniary gain or loss, however, because the Guidelines express a preference for discarding this measure where calculating them will unduly prolong or complicate the sentencing process. U.S.S.G. § 8C2.4(c). Instead, the Guidelines contain an alternative measure which is commonly used: 20% of the volume of affected commerce. U.S.S.G. § 2R1.1(d)(1).

2. Calculating the base fine.

a. The first step in evaluating potential financial exposure is to determine the offense level under U.S.S.G. § 2R1.1 (amended as of November 1, 2005). The base offense level is 12, but this increases as the volume of commerce attributable to the defendant increases. Id.

(1) The base offense level also is increased if the conduct involved participation in an agreement to submit noncompetitive bids. U.S.S.G. § 2R1.1(b)(1). There is a split in authority on the applicability of this increase, with one court holding that there must have been a bid-rotation system (United States v. Heffernan, 43 F.3d 1144, 1149- 1150 (7th Cir. 1994)) and another holding that any agreement related to submission of bids is sufficient (United States v. Romer, 148 F.3d 359, 371 (4th Cir. 1998).

b. The base fine is the greatest of:

(1) the amount shown on the Offense Level Fine Table,

(2) the pecuniary gain to the organization; or

(3) 20% of the volume of affected commerce.

U.S.S.G. § 8C2.4(a)(1-3); id. § 2R1.1(d)(1).

c. Of the three possibilities:

(1) The highest fine under the Offense Level Fine Table for a one-count antitrust offense is $8,100,000, corresponding to an offense level of 29. This offense level is calculated as follows: 12 for the base offense level, 1 for a bid-rigging conspiracy, and 16 for more than $1.5 billion in affected commerce.

(2) Calculating pecuniary gain from an antitrust offense is typically time-consuming, complex, and susceptible of differing interpretations, and is discouraged in cases where the calculation would unduly complicate or prolong the sentencing process. U.S.S.G. § 8C2.4(c).

(3) In most cases, therefore, the base fine is 20% of the volume of affected commerce. U.S.S.G. § 2R1.1(d)(1) & Commentary n.3. The Guidelines support the 20% figure by explaining that "it is estimated that the average gain from price-fixing is 10 percent of the selling price." U.S.S.G. § 2R1.1, Commentary n.3. Because "the loss from price-fixing exceeds the gain," and because of the difficulty of calculating the actual gain or loss, 20% of the volume of affected commerce is used as a proxy. Id. Note, however, that no empirical support is provided in the Guidelines for this statement.

(a) The Guidelines recognize that where there is evidence that the "actual monopoly overcharge" is substantially greater or lesser than 10%, that fact can be taken into account in setting the sentence within the Guideline range. U.S.S.G. § 2R1.1, Commentary n.3. Counsel should be alert to evidence that a conspiracy was unsuccessful, in order to argue for a lower fine within the range.

3. Determining the Volume of Commerce Affected.

a. All appellate courts that have considered the issue have held that the volume of commerce "affected," for purposes of calculating an individual or corporate fine, is not limited to sales made at or above the target price. United States v. Giordano, 261 F.3d 1134 (11th Cir. 2001); United States v. Andreas, 216 F.3d 645, 676-677 (7th Cir. 2000); United States v. SKW Metals & Alloys, Inc., 195 F.3d 83, 91 (2d Cir. 1999); United States v. Hayter Oil Co., 51 F.3d 1265, 1273 (6th Cir. 1995). Because "[c]onspiracies to limit output have broad-ranging effects on all decisions made by the former competitors from the moment of their inception[,]" Andreas, 216 F.3d at 678, there is a presumption that all sales made during the conspiracy period are affected.

b. Three circuits have held that sales unaffected by the conspiracy should not be included in the volume of commerce calculation. Giordano, 261 F.3d at 1146-1147; Andreas, 216 F.3d at 678; SKW Metals, 195 F.3d at 91. Although the Seventh Circuit characterized this as a narrow exception that would occur in "rare circumstance[s]," it gave as an example sales made "at the actual market price." Andreas, 216 F.3d at 678. Because conspiracies often are unable to raise prices above market levels due to competition from non-conspirators or cheating, counsel should determine whether it is possible to reduce a fine by showing that some sales were made at a non-conspiratorial price.

c. The court in Andreas also made explicit what most observers had assumed – that in a firm that makes multiple product lines, only the volume of commerce in the affected product is included, not the firm’s total sales. 216 F.3d at 677.

(1) Note that this differs somewhat from the fine structure in the EU, where fines in excess of one million ECU are based on a percentage of the firm’s total turnover. Council Regulation 17/62 on First Regulation Implementing Articles 85 and 86 of the Treaty, art. 15(2), 1962 O.J. (204).

4. Adjustments to the Base Fine – Culpability Score.

a. An organization starts with a culpability score of 5. U.S.S.G. § 8C2.5(a). Points are added:

(1) for the size of the organization, the involvement (or willful ignorance) of high-level personnel in the offense, and pervasive tolerance of the offense throughout the organization;

(2) if the organization was recently adjudicated guilty of similar misconduct; (3) if the offense constituted a violation of a judicial order or probation; or

(4) if the organization obstructed justice during the investigation. U.S.S.G. § 8C2.5(b)-(e).

b. Points are subtracted if the offense occurred despite an "effective program" to prevent and detect violations of the law. U.S.S.G. § 8C2.5(f) (To qualify, a program must contain compliance standards and procedures that are reasonably capable of reducing the prospect of criminal conduct, and must have the involvement of high-level personnel of the company. See U.S.S.G. § 8A1.2, Commentary n.3.) This does not apply if high-level personnel or an individual responsible for the program participated in or was willfully ignorant of the offense, or if, after becoming aware of an offense, the organization unreasonably delayed reporting it. U.S.S.G. § 8C2.5(f). (1) Prompt reporting is required to obtain the benefit of this reduction. Id. Therefore, counsel for a client with a detection program should take the potential fine range into account when deciding whether to self-report a violation after an investigation has commenced.

c. Points also may be subtracted for self-reporting, cooperation and acceptance of responsibility. U.S.S.G. § 8C2.5(g).

(1) There is a large point reduction if the organization reported the offense prior to an imminent threat of disclosure or government investigation, and within a reasonably prompt time after becoming aware of it, and cooperated fully in the investigation. Id. Because a company that reports information previously unknown to the DOJ is likely to obtain leniency under the DOJ Corporate Leniency Policy – and because this reduction does not apply if the investigation has already started – this reduction probably will not be frequently applied in antitrust cases.

(2) Smaller subtractions are available for cooperation in the investigation and acceptance of responsibility. Id. Cooperation must begin at around the same time the organization becomes aware of the investigation, and it must include disclosure of all pertinent information known to the organization. U.S.S.G. § 8C2.5, Commentary n.12.

5. Determining the Fine Range.

a. A minimum and maximum multiplier is determined from the guidelines based on the culpability score. U.S.S.G. § 8C2.6.

b. The fine range is determined by multiplying the base fine by the minimum and maximum multipliers. U.S.S.G. § 8C2.7.

c. The fine is set within the range. Whether the fine falls closer to the low end, the middle, or the high end of the range depends on several factors, including:

(1) the need for the fine to reflect the seriousness of the offense;

(2) the organization’s role in the offense;

(3) collateral consequences for the company, such as private treble damages actions;

(4) prior civil or criminal misconduct; and

(5) a high culpability score.

U.S.S.G. § 8C2.8.

d. Private treble damages actions, particularly in the recent highprofile international cartel cases, often result in antitrust violators paying far more than criminal fines. The likelihood of substantial civil liability may support a reduction in the criminal fine.

e. In the course of plea discussions, the Division generally will permit counsel to present arguments for why a fine should be at the low end of the range. This is not an opportunity to reargue the facts of the case, but rather to explain why, in the particular circumstances, a culpable defendant should be treated more leniently.

B. Prison Sentences for Individuals.

1. Imprisonment has become the norm for individuals who violate the antitrust laws. Under the Antitrust Criminal Penalty Enhancement and Reform Act of 2004, P.L. 108-237, § 215(a)(3), the maximum term of imprisonment for an antitrust offense has been increased from three to ten years.

a. Although the Division has no jurisdiction over foreign nationals who remain outside the United States, in cases involving international cartel activity where foreign executives were at the center of the conspiracy, it often insists on a custodial sentence for a foreign national in order to reach a plea agreement with the company. b. In plea agreements, the Division typically provides that the defendant will be able to travel freely to the United States without risk of deportation after the sentence has been served.

2. The range of imprisonment is determined by the base offense level (with any adjustments) and the criminal history score.

a. The base offense level for antitrust offenses is 12. U.S.S.G. § 2R1.1(a).

b. Additions to the base offense level, up to a total of 16 points, are made for the volume of affected commerce over $1,000,000. The volume of commerce attributable to an individual is the volume "done by him or his principal in goods or services that were affected by the violation." U.S.S.G. § 2R1.1(b).

c. For bid-rigging, one additional point is added to the base offense level. U.S.S.G. § 2R1.1(b)(1). This requires an actual agreement to rotate bids, not merely a general agreement with respect to bidding. Heffernan, 43 F.3d at 1149-1150.

d. For each offense level, there is a six-month range of imprisonment. Assuming no prior criminal history, and before any upward or downward adjustments (see below), the shortest possible sentence (base offense level 12) is 6 months and the longest (base offense level 29) is 108 months. See U.S.S.G. § 2R1.1(b)(2); U.S.S.G. Sentencing Table, Ch. 5, Pt. A.

3. Adjustments to the Base Offense Level.

a. The base offense level can be adjusted upward if the defendant was an organizer, leader, or manager of the activity, and the activity involved five or more people or was otherwise extensive. U.S.S.G. § 3B1.1. Co-conspirators from other companies count toward the five-person requirement if the evidence shows that the defendant used his power over them to help organize the activity. Andreas, 216 F.3d at 679-680. To be counted, the other people must be criminally liable for participating in a conspiracy. U.S.S.G. § 3B1.1, Commentary n.1. See, e.g., United States v. Maloof, 205 F.3d 819, 830 (5th Cir. 2000).

b. The base offense level can adjusted downward if the defendant was a minimal or minor participant in the activity. U.S.S.G. § 3B1.2. However, the commentary to the revised U.S.S.G. § 2R1.1 (2005) provides that "an individual defendant should be considered for a mitigating role adjustment only if he were responsible in some minor way for his firm’s participation in the conspiracy."

c. The base offense level can also be increased if the defendant "abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense." U.S.S.G. § 3B1.3. Specialized training is required; thus, a high-level executive without specialized training probably does not qualify. Id., Commentary n.3.

d. The base offense level can be adjusted downward for acceptance of responsibility. U.S.S.G. § 3E1.1. The defendant must "clearly [demonstrate] acceptance of responsibility for his offense." Id. Several factors can be considered, including whether the defendant truthfully admitted his role in the conduct and resigned from his position. Id., Commentary n.1. Counsel must assess the professional risks to the individual client and the likelihood of reducing a potential term of imprisonment in advising clients on what steps to manifest acceptance of responsibility.

4. Determining the Range and Departure from the Range.

a. The range of imprisonment is determined by the Sentencing Table. 18 U.S.C. Appx., Ch. 5, Pt. A.

b. A departure from the range is permitted in narrow circumstances where a mitigating circumstance is not adequately taken into account in the Guidelines. 18 U.S.C. § 3553(b).

c. A defendant whose imprisonment would cripple a company may obtain a downward departure. See United States v. Milikowsky, 65 F.3d 4, 8 (2d Cir. 1995) (downward departure to avoid prison sentence).

5. Alternatives to Imprisonment.

a. The Guidelines provide for alternatives to imprisonment, such as community confinement or home detention, or probation combined with these. U.S.S.G. § 5C1.1. However, the Sentencing Commission’s intent is that alternatives such as community confinement should not be used in lieu of a prison sentence.

C. Individual Fines.

1. The maximum fine for an individual under the Sherman Act has recently been increased to $1,000,000. 15 U.S.C. § 1. However, a defendant may pay twice the pecuniary gain derived from the crime, or twice the pecuniary loss to the victims, if that amount exceeds the statutory maximum.

2. The Guidelines provide that the fine range for an individual is 1-5% of the volume of commerce, but not less than $20,000. U.S.S.G. §2R1.1(c)(1).

3. The volume of commerce used in calculating an individual fine is potentially smaller than for a corporate fine. The Guidelines provide that the court should use the volume of commerce "done by [the individual] or his principal in goods or services that were affected by the violation." U.S.S.G. § 2R1.1(b)(2). In the case of a local manager of a division, for example, counsel may try to limit the volume of commerce to only the division’s sales on the ground that those are the only sales for which the individual is responsible.

4. Consider seeking to reduce the fine on the ground of hardship (U.S.S.G. § 5E1.2), even though the Commission’s view is that most antitrust defendants should have the resources to pay. 5. Community service may be ordered as an alternative to a fine if the individual cannot pay. U.S.S.G. § 2R1.1, Commentary n.2. However, this service "should be equally as burdensome as a fine." Id. The Guidelines leave open the question of how to measure the value of community service.


Responding to government investigations in an appropriate way is a difficult, dynamic and critically important challenge for counsel. How you respond to an investigation from the moment it starts – and often before it starts – can irrevocably influence the outcome of the investigation and its impact on your client. Knowing what to do, when and, perhaps more importantly, what not to do, can clearly make a difference in how the government views and treats your client. Doing your homework is important, and careful strategic planning is a must. Those who follow these practical guidelines will serve their clients well. 

Copyright © 2007, Mayer, Brown, Rowe & Maw LLP. and/or Mayer Brown International LLP. This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Mayer Brown is a combination of two limited liability partnerships: one named Mayer Brown LLP, established in Illinois, USA; and one named Mayer Brown International LLP, incorporated in England.

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