On June 9, 2010, President Obama signed into law an extension until 2020 of the Antitrust Criminal Penalty Enhancement and Reform Act (“ACPERA”). The ACPERA extension reinforces the U.S. Department of Justice Antitrust Division’s commitment to aggressively prosecute cartel behavior, and to coordinate its efforts with an ever-increasing list of foreign enforcement agencies. The new law also has important implications for companies that find themselves in civil litigation as, or as defendants with, amnesty applicants.
Originally passed in 2004, ACPERA substantially increased prison time and criminal fines for antitrust violations. In addition, it provided for leniency for self-reporting cartel members. Among its leniency provisions, ACPERA allows the first self-reporter, assuming certain conditions are met, to receive “amnesty” and thus avoid criminal fines and prison time for its employees. Subsequently cooperating parties generally receive reductions in their criminal penalties.
The successful amnesty applicant is also eligible, in related civil litigation, to avoid treble damages and joint and several liability (exposure is limited to “actual damages…attributable to…the [amnesty] applicant”). To obtain those benefits, the applicant must “cooperate” with civil plaintiffs. The nature and timing of the required cooperation was undefined and, recently, has been the subject of dispute, with civil plaintiffs claiming, and in some cases attempting to enforce, cooperation at the early stages of litigation. Applicants involved in civil litigation, by contrast, argued that nothing prevented them from challenging the sufficiency of plaintiffs’ claims, opposing class certification, and pursuing other defensive strategies before offering cooperation.
The ACPERA amendment specifies that following the expiration of a civil stay obtained by the Department of Justice, a leniency applicant must cooperate with civil plaintiffs “without unreasonable delay.” While still subject to dispute about what is “reasonable,” the amendment will likely result in greater pressure on amnesty applicants to cooperate sooner or risk losing ACPERA benefits. Civil defendants alleged to have conspired with the known, or suspected, amnesty applicant should also consider that party’s ACPERA obligations in forming and conducting joint defense arrangements.
The Department of Justice considered the ACPERA extension crucial to its cartel enforcement efforts. Scott Hammond, the Antitrust Division’s Deputy Assistant Attorney General for Criminal Enforcement, calls such leniency provisions “[t]he single most significant development in cartel enforcement” in recent years.1 In her June 9, 2010, statement to the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, Assistant Attorney General Christine Varney credited ACPERA with “significantly enhancing” the Department of Justice’s efforts to detect and prosecute cartels.2 The numbers support those statements. DOJ cartel fines have steadily increased from $152 million in 2000 and for the first time topped $1 billion in 2009.
The Department of Justice has also successfully exported its leniency model, resulting in heightened cartel prosecutions and increased fines overseas as well. Hammond noted that, similar to Congress’s actions on ACPERA, within the last decade 39 of 46 reporting international agencies adopted or revised their leniency programs and 43 of 46 increased the available sanctions for cartel members.3 Hammond noted the “growing worldwide consensus that international cartel activity is harmful, pervasive, and is victimizing businesses and consumers everywhere” and asserted leniency programs have “completely transformed the way competition authorities around the world detect, investigate, and deter cartels” and he credits these programs with “dismantling…the largest global cartels ever prosecuted.”
Assistant Attorney General Varney highlighted two recent multinational cartel prosecutions that resulted in criminal fines against international air carriers (involving enforcers in Brazil, Chile, Israel, Korea, and Luxembourg) and TFT-LCD panel manufacturers (in Korea, Taiwan, and Japan). Varney emphasized the agency’s work with international competition groups including the Organization for Economic Cooperation and Development, the International Competition Network, and the European Union. She also noted a new memorandum of understanding between the Department of Justice and the Russian Federal Anti-Monopoly Service as well as active engagement “with the relatively new Chinese and Indian competition authorities.” Hammond highlighted the five-continent cooperation between antitrust authorities that led to the air transportation fines and an investigation into the marine hose industry where coordination among DOJ, UK and EU enforcers led to multiple searches and arrests in Houston, San Francisco, the UK, and mainland Europe on the same day.
The impact of ACPERA and the growing international emphasis on cartel enforcement is seen in many recent high-profile international investigations in industries including DRAM, optical disk drives, TFT-LCD panels, freight forwarding, marine hose, and air cargo and passenger services. ACPERA’s extension and the Antitrust Division’s efforts to lead cross-border cartel prosecutions reinforce the need for companies operating in international industries to focus on careful antitrust compliance, both here and abroad, and to weigh the implications of ACPERA benefits for the defense of civil litigation.
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1 The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades, presented to the ABA’s National Institute on White Collar Crime, February 25, 2010, at http://www.justice.gov/atr/public/speeches/255515.htm.
This article was originally published by Bingham McCutchen LLP.