In February 2020, at the 13th International Cartel Workshop, Deputy Assistant Attorney General (DAAG) Powers provided some insight as to the DOJ's current views about the Antitrust Division's Leniency Program. The headline: no major changes; but there are a few interesting takeaways, which we offer below.
By way of background, the Leniency Program, in effect for the last 26 years, provides the first company to report a criminal antitrust conspiracy with immunity from prosecution – for itself and its cooperating employees. Leniency has served as a critical tool for the DOJ to assist in its criminal antitrust detection efforts by incentivizing companies to self-report early, effectively creating a "race" to report. The inducement to do so admittedly is strong: immunity versus the risk of indictment and conviction and, in some cases, penalties in the hundreds of millions of dollars.
In his remarks, Powers mainly re-affirmed what he called "three key 'cornerstones'" of the program: (1) the threat of sanctions; (2) the fear of detection; and (3) predictable enforcement practices. Together, these "cornerstones" guide the Division's application of the Program in an evolving cartel climate. While most of his remarks re-affirmed longstanding DOJ policy – like an emphasis on holding individuals accountable, requiring full, complete, and timely cooperation for leniency, and the DOJ's attempt to be predictable and transparent in its enforcement practices – there were a few noteworthy takeaways:
Q: Is the incentive to self-report eroded because DOJ is now offering Deferred Prosecution Agreements to some companies that are not the first to report? A: No.
DAAG Powers devoted part of his remarks to an assessment of the recent policy change permitting companies who do not qualify for leniency (because they were not the first to report) nonetheless to be eligible for Deferred Prosecution Agreements (or DPAs). Responding to criticism that this would minimize the incentive to self-report, Powers reminded the group that the number of leniency requests has not declined so far, emphasizing that immunity from prosecution is a much better outcome for companies than a DPA. He also noted that DOJ weighs several factors in deciding whether to prosecute, only one of which is having an effective compliance program. Because prompt self-reporting, thorough cooperation, and remedial efforts are also critical factors, it is not in a company's best interest to delay reporting in the hopes of later securing a DPA.
He also added that to get a leniency marker, which essentially saves your place in the reporting line, the company need not know that a violation has occurred; it is sufficient that there is evidence that a violation is possible. While the DOJ might think it's no big deal for the company to report a possible violation only to later discover there was none, that decision is fraught for in-house counsel. From the company's perspective, it could be a huge misstep to invite the DOJ to investigate conduct which turns out not to be criminal, only to find other issues; not to mention the expense and disruption caused by having to conduct a full-scale government-facing investigation. Powers simply noted that the company can always withdraw its marker or let it expire – cold comfort for companies and the defense bar.
That said, recognizing that the self-reporting route and subsequent investigation can be extremely expensive, and thus a potential deterrent to prompt reporting, Powers emphasized that the fines for companies that ultimately have to plead guilty or risk trial far exceed the costs of investigating, sometimes to the tune of hundreds of millions of dollars.
Q: How do companies evaluate self-reporting when doing so could implicate prosecutions in other countries? A: We're working on it.
Companies have long understood the challenges of self-reporting when the potential conspiracy crosses international borders – namely, dealing with prosecutors in different countries with different laws and priorities. How can a company in good conscience self-report to the US authorities knowing they will get no leniency from the prosecutors across the border? Powers sought to reassure the group that the DOJ is actively working to investigate cross-border cartel activity in parallel with other countries and that they often seek a global resolution. But, Powers invited the defense bar to weigh in to help them better address the challenges here, implicitly recognizing that the system isn't perfect and can lead to very difficult decisions for companies that discover such conduct.
Q: Doesn't the availability of treble and civil damages discourage companies from self-reporting? A: DOJ supports reauthorization of ACPERA.
The Antitrust Criminal Penalties Enhancement & Reform Act (ACPERA) is a 2004 statute designed to support the Division's Leniency Program in part by exempting leniency applicants from the Clayton Act's joint and several liability and trebling of damages. ACPERA is set to expire in June 2020. While, as Powers reported, the DOJ supports its reauthorization, he acknowledged that the absence of such provisions could be a significant deterrent to potential leniency applicants.
In closing, compliance is key.
Regardless of the challenges Powers outlined, one of the most important takeaways is that DOJ relies on competent and well-run compliance programs as a front-line defense against criminal antitrust activities. While a robust compliance program can never guarantee immunity, having one is key to mitigating potential penalties for those who don't win the reporting race. It also makes it more likely that a company will catch, and thus be able to report, misconduct early.
To read the full remarks, click here.
To read more about the Leniency Program, click here.
To read more about ACPERA, click here.
Takeaways From Recent Remarks On The DOJ Antitrust Leniency Program
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