Antitrust

4 8 A DECLINE IN FINES AT THE DOJ This year the DOJ Antitrust Division celebrates the 25th anniversary of its leniency program. Originally developed in 1978, the leniency program provides incentives for companies to self-report cartel activity. The original iteration of the program was largely underutilized and typically triggered only one leniency application per year. In 1993, the DOJ significantly revamped the program by, for example, automatically granting amnesty to the first successful applicant where there was no pre-existing DOJ investigation, creating the possibility of amnesty even if an investigation had begun, and protecting the successful applicant's cooperating employees from prosecution. Following these revisions, leniency applications increased to approximately one per month. Since the implementation of the new program, DOJ officials have repeatedly noted that the leniency program has been the agency's primary tool for identifying and prosecuting cartel conduct. In the last three years, however, there has been a sharp decline in enforcement activity, which suggests that there has also been a significant decline in leniency applications. For example, in FY2016, criminal antitrust fines collected by the Division totaled nearly US$3.6 billion and total fines in each of the preceding three years equaled or exceeded US$1 billion. 1 In FY2017, that number dropped to just over US$67 million. Similarly, the Division charged 16 companies for criminal antitrust offenses in FY2016, but only half that number in FY2017, and only three in FY2018. Some have suggested that the decline in leniency applications and enforcement activity, more generally, is attributable to increased costs that come with leniency, including costs associated with the need to seek leniency in an increasing number of jurisdictions, certain recent adjustments to the leniency program and resulting exposure in follow-on civil litigations. These costs are relevant considerations in a company's consideration of whether to seek leniency, but it is not clear that they would have tipped the scales so drastically to account for the significant decrease in enforcement activity summarized above. For example, while the number of jurisdictions with amnesty programs has increased, a company considering whether to seek amnesty will be focused on a discrete number of key jurisdictions that are either key players in the global economy (e.g., the U.S., the European Union (EU), China and Japan) or that represent its major markets. Similarly, recent adjustments to the DOJ leniency program may have eroded some of the value of leniency (e.g., by making it more difficult to secure amnesty for former employees), but the fundamental benefit of the bargain remains intact — a successful corporate leniency applicant secures amnesty from prosecution for itself and its current officers, directors and employees. The successful leniency applicant can also significantly limit its exposure in follow-on civil litigation through the ACPERA statute, which provides that a leniency applicant that meets the conditions of that statute is not subject to the joint and several liability and treble damages normally available in civil antitrust cases. CARTELS 08 T H E L E N I E N C Y P R O G R A M H A S B E E N T H E A G E N C Y ' S P R I M A R Y T O O L F O R I D E N T I F Y I N G A N D P R O S E C U T I N G C A R T E L C O N D U C T. I N T H E L A S T T H R E E Y E A R S T H E R E H A S B E E N A S H A R P D E C L I N E I N E N F O R C E M E N T A C T I V I T Y Reduction in Leniency; Drop in Enforcement?

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