On April 4, 2022, U.S. Department of Justice (DOJ) announced new changes to the Antitrust Division’s Leniency Program – a key tool for DOJ’s criminal enforcement against cartels. The Antitrust Division Leniency Program allows the first individual or corporation who reports evidence or an indication that an organization has committed a criminal Sherman Act violation to escape prosecution by cooperating fully with DOJ. These changes mark the second update to the Leniency Program since 2008 and coincide with a number of policy updates and revised guidance from the US antitrust agencies.
DOJ continues to focus on increased enforcement
The DOJ recently updated the Antitrust Division Leniency Policy and Procedures, found in the DOJ Justice Manual, to now require prompt reporting and remediation. These changes are explained in an updated Frequently Asked Questions (FAQs) resource, which are intended to provide practical guidance to the public. Speaking at the American Bar Association’s (ABA’s) Annual Antitrust Conference on Friday, April 8, Assistant Attorney General (AAG) Kanter explained that these updates were intended to (1) use simpler “plain language” in the FAQs to increase accessibility and understanding, and (2) ensure that the leniency program adequately redresses harm and prevents future recidivism.
Kanter reaffirmed his commitment to increasing criminal enforcement of the Sherman Act and responded to “critics saying the [leniency] carrot isn’t sweet enough,” by reminding the audience that leniency “start[s] from the premise that someone has committed a crime.” In the press release, Kanter noted he was providing enhanced transparency and clear “rules of the road” for the business community. “Corporate boards and executives, and the counsel advising them, should understand that sitting on their hands after detecting an antitrust crime will have real ramifications — losing out on leniency means severe consequences.”
The comments from Kanter over the past two weeks underlie the current push for increased criminal enforcement of antitrust violations. In particular, the DOJ has mentioned that it will be paying particular attention to labor-side violations, including wage fixing and agreements not to compete. At the Annual Antitrust Conference, Kanter stressed that the Division particularly wants to encourage reporting illegal activity that the Division is unaware of and before an investigation has been opened (“Type A leniency”) and is using the program to incentivize self-monitoring and self-reporting.
Leniency applicants must apply early and be prepared for full cooperation and remediation
The updated guidance makes it clear that individuals or corporations should seek a marker – i.e., a preliminary step that preserves a company’s place in line while a formal investigation is undertaken – at “the first indication of possible wrongdoing.” But, an organization “may still be eligible . . . if it conducts a preliminary internal investigation in a timely fashion to confirm that it committed a violation before self-reporting.” The DOJ does not define promptness and will make a determination based on the facts of each case. The DOJ has also created a dedicated email address and phone hotline to streamline the application process. This is meant to deter waiting and encourage reporting.
The updated guidance also provides that an applicant must be ready to remediate the harm and improve or develop its corporate compliance before receiving a conditional leniency letter. At the Annual Antitrust Conference, Kanter stressed this means going the extra step beyond paying back restitution to reassure the DOJ that the behavior never happens again. The FAQs note that applicants must use their “best efforts” to do so, while demonstrating that they have taken “reasonable measures” tailored to their size and risk profile to remediate the conduct and prevent future antitrust violations. This builds upon former AAG Delrahim’s 2019 comments that the DOJ will consider a company’s antitrust compliance program when deciding whether to bring criminal charges.
Practitioners are concerned that the DOJ updates will make the leniency process more difficult and uncertain – dissuading companies from coming forward. Though the DOJ has simplified the procedures by providing a hotline and e-mail address, it has given itself complete discretion to assess promptness, while expanding the categories of individuals responsible for prompt reporting. Kanter’s strong comments in the weeks following the update have muddied the waters about what will constitute “best efforts” and “reasonable measures” in relation to remediation. In addition, practitioners worry that the DOJ may decide that an applicant is no longer eligible for leniency if employees do not recognize possible cartel conduct in need of reporting, or if a company reports years-old conduct that it only recently uncovered.
Speaking at the ABA Annual Antitrust Conference, Marvin Price, the DOJ Director of Criminal Enforcement, tried to address concerns regarding “prompt reporting” by reminding practitioners that DOJ officials have been telling companies to “promptly report” cartel conduct since the corporate leniency policy was issued in 1993. He also said that he does not expect the promptness requirement to cause any uncertainty or create any more burdens on companies. Practitioners will be watching closely to see how the DOJ’s updates play out in practice.
