Acting Deputy Assistant Attorney General Richard A. Powers delivered remarks at the Organisation for Economic Co-operation and Development (OECD) conference in Paris, France, on June 5, 2018. A full version of the prepared remarks is available here. Mr. Powers’ comments focused on leniency programs, which have proliferated throughout the world. He reaffirmed the Antitrust Division’s commitment to its Corporate Leniency Program. He also highlighted a concern that is now a regular topic of discussion on most antitrust panels:
“Some have started to wonder whether leniency has begun to suffer from its own success. Specifically, defense counsel have asked whether the costs of seeking leniency in scores of jurisdictions, and the increasing exposure from private damages actions in multiple jurisdictions, have made the cost of seeking leniency too high. Unsurprisingly, we at the Department of Justice think the opposite is true. As worldwide exposure increases, so do the potential benefits of leniency. The benefits of seeking leniency therefore still outweigh the increasing costs.”
Below are excerpts from the remarks and some of my observations (in italics):
- “I will briefly address two of those challenges which serve as potential deterrents to self-reporting: 1) the increased costs of reporting; and 2) the increased exposure to private damages actions.”
- “For example, when leniency applicants raise these issues with us, we can: 1) try to coordinate timelines and deadlines to allow the applicant to meet them in multiple jurisdictions; 2) tailor our document demands to get the necessary evidence from the leniency applicant without unnecessary burden; and 3) where possible, coordinate the timing and locations of interviews to alleviate burdens on applicants and employees.”
The key words above are “try” and “where possible.” The concern of a leniency witness being interviewed around the world by multiple jurisdictions is not new. And, coordinating cooperation with witnesses and document reduction is a tremendous burden on a going concern. Throughout the time I was with the Antitrust Division, competition authorities tried to coordinate. But, each jurisdiction is accountable to its own leadership; has its budget to worry about if results are not produced and each competition agency has a healthy desire to stay relevant and prominent. But, if jurisdictions become more concerned about killing the “golden goose” of leniency applicants, it will tilt the scale (at least slightly) in favor of more cooperation among competition agencies and less burden on the applicant. It gives the leniency company’s plea for “help” a little more juice.
- ACPERA [Antitrust Criminal Penalty Enhancement and Reform Act of 2004],intended to reduce the disincentive to seeking leniency associated with treble private damages. We have recently heard increasing concerns from counsel representing leniency applicants that the benefits of ACPERA are not as significant as they once hoped. For instance, we have heard that if co-conspirators are able to reach single-damage settlements with private plaintiffs, then ACPERA does not make the leniency applicant better off than those co-conspirator companies that did not receive leniency.
Any company seeking leniency has two sometimes competing objectives: 1) secure the leniency, but 2) limit treble damage claims as much as possible. Treble damages suits of course are proper and necessary so customers who have been overcharged can obtain damages. But, the civil suits that follow a cartel investigation set up a potentially troublesome dynamic. To obtain leniency (and the benefit under ACPERA), a leniency applicant has pledged to provide full and complete cooperation. There is great incentive for the applicant to do just that in order to obtain its “Conditional Leniency Letter.” But once that is obtained, there is incentive for memories to fade or otherwise reduce the level of cooperation in order to minimize exposure to treble damages. Defense attorneys often complain that they are not receiving the benefits of ACPERA while plaintiffs’ attorneys complain they are not receiving the cooperation required under ACPERA.
- “Indeed, when a company is considering whether to seek leniency, that decision is not a purely financial one; individual liberty interests also may be at stake. In a jurisdiction such as ours, the threat of years spent in a federal prison has only increased.”
Mr. Powers reminds us of the power of leniency: non prosecution for executives (often many) who otherwise might face the very real prospect of prison time. The decision for defense counsel is often obvious–win the race to the DOJ to be first in line for a leniency marker and obtain non-prosecution status for the company and its culpable individuals. But there are always cases on the margins; a cartel unlikely to be discovered; a cartel nearing the statute of limitations; or an agreement that was so undisciplined, counsel may think a successful prosecution unlikely. As the cost of obtaining leniency increases, there are undoubtedly potential leniency applicants who decide to lay low and hope for the best. Some of these guessed wrong and paid a heavy price. The ones who guessed right and laid low usually don’t appear on ABA panels.
This will be a continuing discussion for sure. Thanks for reading.