New Tools for Antitrust Prosecutors: President Signs Bill that Increases Sentences and Encourages Cooperation

On June 22, 2004, President Bush signed an important amendment to the antitrust laws. The new statute dramatically increases criminal sentences and creates important new benefits for those who cooperate with Department of Justice antitrust investigations. The statute also mandates some procedural changes for courts when they approve settlements of Department of Justice civil antitrust cases.

Sentences: Maximum corporate fines will increase to $100 million from $10 million, maximum prison sentences will rise to 10 years from three years. Maximum fines for individuals will increase to $1 million from $350,000. All antitrust violations that continue after June 22, 2004 will be affected by the increased penalties. This increased maximum for corporate fines makes it much easier for the Department of Justice to obtain higher penalties under federal sentencing guidelines. Amendments to the guidelines will also increase the minimum sentences for antitrust violations. This amendment is part of a trend to increase criminal penalties for white-collar offenses in the aftermath of Enron and other corporate scandals.

Leniency: Companies that receive leniency from the Department of Justice in criminal antitrust investigations will only be liable for single damages to victims and will not be liable for damages resulting from the sales of their co-conspirators. Currently, antitrust plaintiffs can obtain treble damages and can recover the total losses from any member of the conspiracy. To take advantage of this dramatic reduction in civil damages exposure, a company must enter into a leniency agreement with the Department (i.e., be the first party to report its illegal conduct), fulfill the terms of the agreement and cooperate fully with the civil plaintiffs. The statute requires all cooperating companies to provide both the Department and the civil plaintiffs with all relevant facts, including documents and access to individual witnesses. This amendment is intended to encourage a corporation that discovers its employees violated the antitrust laws to report the conduct and take advantage of the leniency program.

Consent Decrees: The statute requires courts reviewing a settlement of civil antitrust cases by the Department of Justice to consider the impact of the settlement on competition. This is a minor modification and clarification of procedures that have been in place since the 1970s.