Leniency programmes in the USA are
being administered by the Department of Justice:The Antitrust Division. Through
the Antitrust Division’s Leniency Program, a corporation can avoid criminal
convictions and fines and individuals can avoid criminal convictions, prison
terms, and fines, by being first to confess participation in illegal cartel
conduct, by fully cooperating with the Division, and by meeting other specified
conditions.
The policy was first implemented in
1978 and has since been substantially revised.[1]
There are two types of leniency
provided by the Antitrust Division:
·
Type A Leniency and
·
Type B leniency
·
The
The requirements for qualification
under Type A or Type B are almost similar with a few distinctions.
TYPE A LENIENCY
This is where the illegal conduct is
self-reported before a government investigation has begun; this type of
leniency applicants must meet the following six conditions:[2]
- At the time the corporation comes forward to report the illegal activity, the Division has not received information about the illegal activity being reported from any other source;
- The corporation, upon its discovery of the illegal activity being reported, took prompt and effective action to terminate its part in the activity;
- The corporation reports the wrongdoing with candor and completeness and provides full, continuing and complete cooperation to the 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 corporation makes restitution to injured parties; and
- The corporation did not coerce another party to participate in the illegal activity and clearly was not the leader in, or originator of, the activity.
TYPE B LENIENCY
This is a Leniency where the illegal
conduct is self-reported after an investigation has been initiated. Type
B Leniency is available to the first company to come forward and qualify for
leniency after an investigation has already been initiated and requires many of
the same conditions as Type A Leniency, with the additional requirements that:[3]
ü at the time
the Corporation confesses its behavior, the Division does not yet have
evidence against the company that is likely to result in a sustainable
conviction; and
ü the Division
determines that granting leniency would not be unfair to others, considering
the nature of the activity, the confessing corporation’s role in the activity,
and the time at which the corporation comes forward.
Effect of a leniency to a corporation
If a corporation qualifies for leniency
under Part A, above, all directors, officers, and employees of the corporation
who admit their involvement in the illegal antitrust activity as part of the
corporate confession will receive leniency, in the form of not being charged
criminally for the illegal activity, if they admit their wrongdoing with candor
and completeness and continue to assist the Division throughout the
investigation.
If a corporation does not qualify for
leniency under Part A, above, the directors, officers, and employees 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.
In 2004, the Antitrust Criminal Penalty
Enhancement and Reform Act of 2004 (ACPERA) was passed.
Under this statute, leniency applicants
are only required to pay actual damages in follow-on civil damage claims,
instead of the treble damages and joint-and-several liability ordinarily
imposed under the antitrust laws. In order to take advantage of the
“de-trebling” provision the leniency applicant, in addition to cooperating with
the government, must also provide a satisfactory cooperation to the private
plaintiffs in their civil damage claims.[4]
The statute defines satisfactory cooperation to include a full account to the
claimant of all facts known to the applicant that are potentially relevant to
the civil action as well as all documents or other items potentially relevant.[5]
The Effectiveness of the Corporate
Leniency Program
The Corporate Leniency Program has
proved to be effective in the USA as it has resulted in a greater number of
amnesty applications, a dramatic increase in criminal fines, and an increased
number of individual prosecutions and jail sentences for antitrust violations.
The programme has an element of
certainty for corporations that want to resolve their criminal liability. If a
corporation meets the requirements of the Leniency Program, the Antitrust
Division has virtually no discretion
to deny the request. The programme has
a standing credibility as almost all corporations that have qualified for the
leniency have been granted.[6]
By 2005, with the new Leniency Program
in place, the application rate increased to approximately two eachmonth.[7]
There has also been an increase
in criminal fines that are being collected. Comparison of criminal fines
before and after the adoption of the current Leniency Program shows a
spectacular increase in criminal fines. In the fiscal years starting from 2009,
the Department of justice has been collecting over 4.2 billion US Dollars in
fine per year.[8]
2004 Amendments to the leniency policy and its
effects
It Increased the maximum jail sentence for
individuals for anticompetitive conduct to 10 years
Minimum fine to corporations for anticompetitive
conduct increased from USD$10M to USD$100M . this was applied in the case of the
Vitamins Cartel – where F. Hoffmann-La Roche was fined USD$500M and in
the Air Travel Price-Fixing case, Air France and KAL were fined
USD$300M each.
Risks of leniency programme
May result into restitution to the parties damaged
by the anticompetitive conduct even if the damage occurred outside USA.
It doesn’t stop the continuation of the criminal
investigation by the authorities outside the USA or regarding a separate
anti-competitive activity
It leads to loss of market positions since the
corporation’s reputation shall be in question as well as hostility from the
consumers and competitor.
[1] Corporate Leniency Policy in 1993 and
Leniency Policy for Individuals in 1994 revised the original policy by giving
various guidelines as to how leniency programmes for corporations and
individuals respectively should be effected..
[2] The Division’s Corporate Leniency
Policy and Leniency Policy for Individuals, available at
http://www.usdoj.gov/atr/public/criminal/leniency.htm.
[3] U.S. Department of Justice, Antitrust
Division, Corporate Leniency Policy (issued August 10, 1993), available at
http://www.justice.gov/atr/public/guidelines/0091.htm
[6] There is only one reported instance in
which the Antitrust Division tried to rescind a leniency agreement and that Is
the case of Stolt-Nielsen S.A. v. United States , 352 F. Supp. 2d 553, 568
(E.D. Pa. 2005)
[7] Scott D. Hammond, An Overview of
Recent Developments in the Antitrust Division’s Criminal Enforcement
Program, Address Before ABA Midwinter
Leadership Meeting (Jan. 10, 2005) available at
http://www.usdoj.gov/atr/public/speeches/207226.htm
[8] Scott D. Hammond, The Evolution of
Criminal Antitrust Enforcement Over the Last Two Decades, Address Before 24th
Annual National Institute on White Collar Crime (Feb. 25, 2010) available at
http://www.usdoj.gov/atr/public/speeches/255515.htm
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