On April 4, 2022, the Department of Justice’s Anti-Trust Division (the “Division”) provided some welcome guidance on its Leniency Program. The Division announced updates to its Leniency Policy and issued a revised set of nearly 50 frequently asked questions. The recent changes seek to make the Leniency Program much more comprehensible for businesses and/or individuals facing government examination of their “cartel” activities.
WHAT IS A CARTEL?
A cartel is a collection of individual entities that would normally compete with each other in a market, but instead, have allegedly agreed to collude with one another to control the market and improve their profitability.
The Division’s Leniency Policy allows the first individual or company to self-report its involvement in an antitrust cartel to avoid prosecution if it cooperates with the Division’s investigation and prosecutions, and meets other conditions. The updated policy now also requires that a corporate applicant promptly self-report after discovering its wrongful conduct. See FAQ 22 on page 8.
Understanding and preparing our white collar clients for the new promptness requirement is critical. This update immediately impacts the the advice we will give clients after April 4, 2022.
Whether or not the report is prompt in the opinion of DOJ will depend upon “the facts and circumstances of the illegal activity and the size and complexity of operations of the corporate applicant. It is the applicant’s burden to prove that its self-reporting was prompt.” This inherently subjective “facts and circumstances” language is not rich with clarity. On the other hand, this language flags DOJ-Antitrust’ s sharp focus on the belief that if potential applicants are “uncertain whether particular conduct is criminal” they should nonetheless “seek a marker as soon as possible.”
In its attempt to define “prompt” reporting, DOJ-Antitrust acknowledged an understanding that organizations may well conduct a preliminary internal investigation before self-reporting. That said, the new guidance makes clear that if an organization confirms its involvement in illegal activity and does not choose to self-report until later learning that an investigation is open, there will be no leniency.
The promptness requirement certainly highlights an increased need for speedy and timely internal investigations. This could prove difficult for smaller businesses that do not have in-house counsel or regular access to legal counsel. Note that the promptness requirement does not apply to organizations that received a marker before the announcement of the new policy (April 4, 2022).
Regarding the updates, Assistant Attorney General Jonathan Kanter of the Antitrust Division stated in no uncertain terms that organizations caught “sitting on their hands after detecting an antitrust crime will have real ramifications — losing out on leniency means severe consequences.”
what are the current conditions of the leniency program?
- There are two types of corporate leniency, A and B.
Type A Corporate Leniency
Leniency will be granted to an organization that reports its participation in illegal activity before the Antitrust Division has begun an investigation if:
1. At the time the applicant reports the illegal activity, the Antitrust Division has not received information about the illegal activity from any other source;
2. The applicant, upon its discovery of the illegal activity, promptly reports it to the Antitrust Division;
3. The applicant reports its participation in the illegal activity with candor and completeness and makes a confession of wrongdoing that is truly a corporate act, as opposed to isolated confessions of directors, officers, and employees;
4. The applicant provides timely, truthful, continuing, and complete cooperation to the Antitrust Division throughout its investigation;
5. The applicant uses best efforts to make restitution to injured parties, to remediate the harm caused by the illegal activity, and to improve its compliance program to mitigate the risk of engaging in future illegal activity; and
6. The applicant did not coerce another party to participate in the illegal activity and clearly was not the leader or originator of that activity.
If Type A leniency is granted, the applicant’s current directors, officers, and employees will not be charged criminally for the illegal activity if they provide timely, truthful, continuing, and complete cooperation to the Division throughout its investigation of the illegal activity.
Type B Corporate Leniency
Leniency will be granted to an organization that reports its participation in illegal activity but does not meet the criteria for Type A Corporate Leniency if:
1. At the time the applicant reports the illegal activity, the Antitrust Division does not yet have evidence against the applicant that, in the Antitrust Division’s sole discretion, is likely to result in a sustainable conviction against the applicant;
2. The applicant, upon its discovery of the illegal activity, promptly reports it to the Antitrust Division;
3. The applicant reports its participation in the illegal activity with candor and completeness and makes a confession of wrongdoing that is truly a corporate act, as opposed to isolated confessions of directors, officers, and employees;
4. The applicant provides timely, truthful, continuing, and complete cooperation that advances the Antitrust Division’s investigation;
5. The applicant uses best efforts to make restitution to injured parties, to remediate the harm caused by the illegal activity, and to improve its compliance program to mitigate the risk of engaging in future illegal activity;
6. The applicant did not coerce another party to participate in the illegal activity and clearly was not the leader or originator of that activity; and
7. The applicant is the first to qualify for leniency for the illegal activity reported and the Antitrust Division determines that granting leniency to the applicant would not be unfair to others.
In evaluating whether granting leniency to the applicant would be unfair to others, the Antitrust Division will consider the nature of the illegal activity, the applicant’s role in it, the applicant’s criminal history, and the timing of the leniency application.
The Antitrust Division will consider including non-prosecution protection for current directors, officers, and employees of a Type B corporate leniency applicant, for the illegal activity. Such protection is not guaranteed and is at the Antitrust Division’s sole discretion. Individuals seeking non-prosecution protection as part of a Type B application must admit their wrongdoing with candor and completeness and provide timely, truthful, continuing, and complete cooperation that advances the Antitrust Division’s investigation.
- Individual Leniency
Leniency will be granted to an individual reporting their participation in illegal activity before the Antitrust Division has begun an investigation if:
1. At the time the individual reports the illegal activity, the Antitrust Division has not received information about the illegal activity from any other source;
2. The individual reports the wrongdoing with candor and completeness and provides timely, truthful, continuing, and complete cooperation to the Antitrust Division throughout its investigation; and
3. The individual did not coerce another party to participate in the illegal activity and clearly was not the leader or originator of that activity.
Any individual who does not qualify for leniency under the Individual Leniency Policy will be considered for statutory or informal immunity or a non-prosecution agreement. The Antitrust Division will make such decisions on a case-by-case basis consistent with the Principles of Federal Prosecution.
Last, note that the Division has posted Model Conditional Leniency Letters along with a direct reporting email address in its update.