Criminal Antitrust Practice Donald C. Klawiter J. Clayton Everett, Jr. Jennifer M. Driscoll

Criminal Antitrust PracticeCriminal Antitrust PracticeCriminal Antitrust PracticeCriminal Antitrust Practice

Donald C. KlawiterDonald C. Klawiter

J. Clayton Everett, Jr.J. Clayton Everett, Jr.

Jennifer M. DriscollJennifer M. Driscoll

Statutory FrameworkStatutory FrameworkStatutory FrameworkStatutory Framework

Section 1 of the Sherman ActSection 1 of the Sherman Act Contracts, combinations or conspiracies in Contracts, combinations or conspiracies in

restraint of trade a felony.restraint of trade a felony. Other criminal antitrust statutes (Section 2, Other criminal antitrust statutes (Section 2,

R-P Act) are not prosecuted.R-P Act) are not prosecuted.


Only hard-core cartel activities prosecuted:Only hard-core cartel activities prosecuted: Price fixingPrice fixing Market allocationMarket allocation Customer allocationCustomer allocation

Prosecutions by the Antitrust Division of the U.S. Prosecutions by the Antitrust Division of the U.S. Department of JusticeDepartment of Justice Deputy Assistant Attorney General for Criminal Deputy Assistant Attorney General for Criminal

Enforcement: Scott HammondEnforcement: Scott Hammond National Criminal Enforcement SectionNational Criminal Enforcement Section 7 Regional Offices (NY, SF, DA, PH, AT, CH, CL)7 Regional Offices (NY, SF, DA, PH, AT, CH, CL)


Maximum corporate fines = Maximum corporate fines = $100 million$100 million Twice the gainTwice the gain Twice the lossTwice the loss

Maximum individual fines and prison Maximum individual fines and prison terms:terms: $1 million$1 million 10 years10 years


Other countries with criminal antitrust Other countries with criminal antitrust statutes:statutes: CanadaCanada UKUK

ExtraditionExtradition

Government Investigation Government Investigation TechniquesTechniques

Government Investigation Government Investigation TechniquesTechniques

Grand JuryGrand Jury Search WarrantsSearch Warrants ““Ambush” InterviewsAmbush” Interviews Video and Audio TapesVideo and Audio Tapes

Grand Jury InvestigationsGrand Jury InvestigationsGrand Jury InvestigationsGrand Jury Investigations

Grand Jury: investigates possible criminal Grand Jury: investigates possible criminal violations of federal lawsviolations of federal laws Secret proceedingsSecret proceedings Subpoenas for documents and witnesses may be Subpoenas for documents and witnesses may be

issuedissued Return of indictment marks beginning of Return of indictment marks beginning of

criminal antitrust litigationcriminal antitrust litigation

Witness ImmunityWitness ImmunityWitness ImmunityWitness Immunity

Fifth Amendment rightsFifth Amendment rights Statutory Immunity—18 U.S.C. Statutory Immunity—18 U.S.C. §6002§6002

Allows compelled testimonyAllows compelled testimony ““Use-Fruits” ImmunityUse-Fruits” Immunity Must be approved by courtMust be approved by court

Contractual immunity—”Queen for a day”Contractual immunity—”Queen for a day” Use immunityUse immunity Usually only offered to individuals government has Usually only offered to individuals government has

decided it is unlikely to prosecutedecided it is unlikely to prosecute

Corporate Leniency ProgramCorporate Leniency ProgramCorporate Leniency ProgramCorporate Leniency Program

To date, the most effective tool for deterring cartel To date, the most effective tool for deterring cartel activity.activity.

A company can qualify for leniency even if the A company can qualify for leniency even if the Division has opened an investigation, provided Division has opened an investigation, provided that certain criteria are satisfied. that certain criteria are satisfied.

Principles of post-investigation leniency grants Principles of post-investigation leniency grants include include The importance of being first in and fully cooperative;The importance of being first in and fully cooperative; The significance of restitution to injured parties; and The significance of restitution to injured parties; and The role of the Division in determining the fairness and The role of the Division in determining the fairness and

propriety of leniency.propriety of leniency.

Pleas and SentencingPleas and SentencingPleas and SentencingPleas and Sentencing

Sentencing GuidelinesSentencing Guidelines No longer mandatory, but still provide No longer mandatory, but still provide

frameworkframework ““Volume of Commerce Affected”Volume of Commerce Affected” Culpability ScoreCulpability Score Fine/Sentence RangeFine/Sentence Range Cooperation DiscountsCooperation Discounts


““Volume of Commerce Affected”Volume of Commerce Affected” Defendant’s U.S. sales during period of Defendant’s U.S. sales during period of

conspiracyconspiracy 20% of VOC = base fine20% of VOC = base fine


Culpability ScoreCulpability Score Size of organization and seniority of participantsSize of organization and seniority of participants Prior violationsPrior violations Violations of court ordersViolations of court orders Compliance programCompliance program Acceptance of responsibility/ cooperationAcceptance of responsibility/ cooperation

Determines length of sentence for individualsDetermines length of sentence for individuals Determines multiplier for corporationsDetermines multiplier for corporations

Multipliers range from 1.0 to 4.0Multipliers range from 1.0 to 4.0


Components of plea agreement:Components of plea agreement: Factual basisFactual basis Defendant’s cooperation obligationsDefendant’s cooperation obligations Government’s agreement not to prosecuteGovernment’s agreement not to prosecute ““Carve outs”Carve outs”

Vary depending on (a) timing of plea (b) degree of Vary depending on (a) timing of plea (b) degree of cooperationcooperation


Types of PleasTypes of Pleas Type B: defendant must live with whatever Type B: defendant must live with whatever

punishment is imposed by courtpunishment is imposed by court Type C: plea agreement may be nullified if Type C: plea agreement may be nullified if

court does not accept agreed pleacourt does not accept agreed plea


Cooperation DiscountsCooperation Discounts Amnesty typically available to first cooperatorAmnesty typically available to first cooperator Second cooperator typically gets best fine Second cooperator typically gets best fine

discount and smallest number of “carve outs”discount and smallest number of “carve outs” Subsequent cooperators tieredSubsequent cooperators tiered


Guilty plea is prima facie evidence of Guilty plea is prima facie evidence of violation for subsequent civil cases.violation for subsequent civil cases. Civil exposure = 3x damages + attorneys’ feesCivil exposure = 3x damages + attorneys’ fees Joint + several liability; no right of contributionJoint + several liability; no right of contribution

Importance of appropriately defining the Importance of appropriately defining the scope of the conduct at issuescope of the conduct at issue


ACPERA (2004)ACPERA (2004) Single damagesSingle damages No joint liabilityNo joint liability Requires “cooperation” with plaintiffsRequires “cooperation” with plaintiffs

Multi-Jurisdictional IssuesMulti-Jurisdictional IssuesMulti-Jurisdictional IssuesMulti-Jurisdictional Issues Each jurisdiction has different leniency Each jurisdiction has different leniency

requirements and will demand a separate requirements and will demand a separate application.application.

Discovery of documents and witnesses located Discovery of documents and witnesses located outside US is difficult, but competition authorities outside US is difficult, but competition authorities do share information.do share information.

There is a risk that written statements to There is a risk that written statements to competition authorities abroad will be competition authorities abroad will be discoverable in US civil actions.discoverable in US civil actions.

Documents

Criminal Antitrust Practice Donald C. Klawiter J. Clayton Everett, Jr. Jennifer M. Driscoll