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Article: June 2016: Antitrust & Competition Update

Business Litigation Reports

DOJ Revises Answers to Frequently Asked Questions About Antitrust Division’s Leniency Program. The Department of Justice’s Leniency Program gives corporations and individuals the opportunity to self-report and cooperate in the Division’s investigations in order to avoid criminal conviction, fines, and prison sentences. In November 2008, the Division issued “Frequently Asked Questions Regarding the Antitrust Division’s Leniency Program and Model Leniency Letters” (“FAQs”), describing the Division’s approach to several important topics, including how to apply for leniency; the criteria for leniency under both the corporate and individual policies; the issuance of conditional leniency letters and unconditional, final leniency letters; and confidentiality. On January 17, 2017, the Division issued an updated version of those FAQs. Frequently Asked Questions About the Antitrust Division’s Leniency Program and Model Leniency Letters (Jan. 26, 2017), https://www.justice.gov/atr/page/file/926521/download.

The updated FAQs mark several important changes in the Division’s approach to the Leniency Program and the benefits applicants can expect to receive as a result of their participation.

Non-Antitrust Crimes. There is a notable shift in the FAQs’ description of the program’s applicability to non-antitrust crimes. These standards apply to both corporate and individual leniency. While both FAQs state that the Leniency Program binds only the Antitrust Division, the updated FAQs describe a different standard. In 2008 the FAQs stated: “The grant of conditional leniency usually protects the applicant for any activity committed in connection with a criminal antitrust violation prior to the date of the conditional leniency letter.” 2008 FAQs at 13 (emphasis added).

The updated FAQs, on the other hand, state: “The grant of conditional leniency usually protects the applicant for any activity committed in furtherance of a criminal antitrust violation prior to the date of the conditional leniency letter.” 2017 FAQs at 13 (emphasis added).

In another contrast, the 2008 FAQs stated that the Division will grant leniency “not only for a criminal antitrust violation, but also for other offenses committed in connection with the antitrust violation.” 2008 FAQs at 7 (emphasis added). The updated FAQs raise the bar: “[T]he Antitrust Division commits to not prosecute a qualifying leniency applicant for the antitrust violation it reports or for acts or offenses integral to that violation.” 2017 FAQs at 7 (emphasis added). These changes describe a narrower realm of protected activity and suggest that applicants may put themselves at some risk by disclosing non-antitrust crimes through the Program.

With regard to prosecution by other agencies, both FAQs provide some reassurance. The 2008 FAQs state that, “[t]o date . . . there have been no instances where a separate prosecuting agency has elected to prosecute [conduct usually integral to an antitrust violation] by a leniency applicant.” 2008 FAQs at 7. The updated FAQs state that “[i]t has been the Antitrust Division’s experience that other prosecuting agencies do not use other criminal statutes to do an end-run around leniency.” 2017 FAQs at 7. The new FAQs go on to warn, however, that “applicants should not expect to use the Leniency Program to avoid accountability for non-antitrust crimes.” Id.

Cooperation. The updated FAQs underline full cooperation with investigations. The 2017 version dedicates far more space to spelling out that representatives of a company under investigation may be carved out of the scope of the leniency letter if they fail to fully cooperate with the investigation or if they stop cooperating at any time. 2017 FAQs at 20.

The 2017 FAQs also include a more robust assertion of the Division’s discretion in determining immunity for individuals whose companies apply for Type B Leniency, which may be granted even after the Division has received information about a company’s illegal antitrust activity if the company meets certain criteria. The update emphasizes that “the Division has more discretion with regard to personnel of Type B Leniency applicants.” Id. The 2008 FAQs had stated that, “[i]n practice . . . the Division ordinarily provides leniency to all qualifying current employees of Type B applicant in the same manner that it does for Type A applicants.” 2008 FAQs at 20. The new FAQs offer only that the Division “often chooses to include protection for current directors, officers, and employees of Type B Leniency applicants” and specifically notes that the Division may exclude directors, officers, and employees who are determined to be “highly culpable.” 2017 FAQs at 20–21.

The 2017 FAQs also take a harder line on the inclusion of company representatives in the scope of the protection: “Former directors, officers, and employees are presumptively excluded from any grant of corporate leniency.” 2017 FAQs at 22.

While the 2008 FAQs stated that the Division “often reaches [] agreements” to grant leniency to former representatives, 2008 FAQs at 18, the updated FAQs note that “such protections are only offered when the specific former directors, officers, and employees provide substantial, noncumulative cooperation . . . or when their cooperation is necessary for a leniency applicant to make a confession of criminal antitrust activity sufficient to be eligible for conditional leniency,” 2017 FAQs at 22.

Though some of the changes may give potential applicants pause, the 2017 FAQs and the Division’s practices still provide a number of incentives for applicants to cooperate fully. The 2008 “Amnesty Plus” policy, which encourages subjects of ongoing investigations to report involvement in a separate antitrust conspiracy, continues, now known as “Leniency Plus.” 2017 FAQs at 9; 2008 FAQs at 8. Credit for cooperation under this policy is calculated the same way under both FAQs. 2017 FAQs at 10; 2008 FAQs at 9. The updated FAQs go further and feature a new question describing the Division’s current approach to “Penalty Plus,” the policy governing situations where a company pleads guilty to an antitrust offense but fails to report an additional antitrust crime in which it was also involved. 2017 FAQs at 11. Under Penalty Plus, a company that fails to report its involvement in a separate antitrust conspiracy does not only forego benefits under Leniency Plus, but also is subject to more severe punishment for the additional crime.

Conclusion. All companies should be familiar with the Leniency Program, the 2017 FAQs, and Division practice. The 2017 changes may cause corporations and individuals to make different decisions than they might have before the revisions.