U.S. Congress Renews Civil Leniency for Companies That Self-Report Sherman Act Criminal Violations

June 4, 2010

On May 27, 2010, Congress passed a bill extending the civil leniency provisions of the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 ("ACPERA") for another ten years.  President Obama is expected to sign the extension into law.  Without this extension, ACPERA’s civil leniency provisions would have expired on June 22, 2010.

ACPERA protects individuals and companies that self-report criminal violations of the Sherman Act to the Department of Justice’s Antitrust Division from treble damages and joint-and-several liability in private lawsuits.  Normally, trebling and joint-and-several liability are automatic enhancements to damages awarded to civil antitrust plaintiffs.  In exchange for cooperation with plaintiffs, ACPERA limits the civil liability of leniency applicants to single damages attributable to the leniency applicant’s own sales to plaintiffs.  Other co-conspirators, however, remain jointly and severally liable for all damages, including treble damages.  ACPERA’s protections for leniency applicants were designed to promote participation in the Antitrust Division’s leniency program while encouraging cooperation with plaintiffs.  The Antitrust Division has stated that ACPERA’s damage limitation "removes a major disincentive for self-reporting and makes the Division’s Corporate Leniency Program even more effective at detecting and prosecuting cartels."  Scott D. Hammond, Recent Developments, Trends, and Milestones in the Antitrust Division’s Criminal Enforcement Program, address before the ABA Section of Antitrust Law (Mar. 26, 2008).  Statistics recently shared by the Antitrust Division demonstrate that the Corporate Leniency Program has been an extremely effective enforcement tool for detecting and prosecuting cartels.  "In the United States, companies have been fined more than $5 billion for antitrust crimes since Fiscal Year 1996, with over 90 percent of this total tied to investigations assisted by leniency applicants.  The Antitrust Division typically has approximately 50 international cartel investigations open at a time, and more than half of these investigations were initiated, or are being advanced, by information received from a leniency applicant."  See Scott D. Hammond, The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades, address before the National Institute on White Collar Crime (Feb. 25, 2010).

When originally enacted in 2004, ACPERA contained a five-year sunset provision.  Last year, Congress extended the sunset date to June 22, 2010.  The bill extending ACPERA for a further ten years was introduced based on input from the Department of Justice, the American Bar Association, and representatives of civil litigants, leniency applicants, and cartel whistleblowers.  See 156 Cong. Rec. E882-83 (daily ed. May 19, 2010) (statement of Rep. Johnson); see also Joel Willard, ACPERA: An Unfinished Experiment, Antitrust Report, Issue 3, 2009.  With broad support from the legal community, both houses of Congress supported the extension nearly unanimously.  Once signed by President Obama, the legislation will postpone ACPERA’s sunset until June 22, 2020. 

The legislation also clarifies the timing of a leniency applicant’s cooperation with civil plaintiffs in order to fulfill its civil cooperation obligations under ACPERA, which entail an accounting of relevant facts and providing reasonable access to documents and witnesses.  Originally, the timeliness of cooperation was a consideration under the Act only if a leniency applicant approached the Antitrust Division after the filing of civil litigation or the commencement of a state investigation.  The legislation, however, directs courts to consider the timeliness of an applicant’s cooperation with civil plaintiffs in all cases.  In recognition that DOJ criminal antitrust investigations are frequently generated by leniency applications and that the Division often intervenes in civil litigation to stay substantive discovery that might impair its investigations, the legislation will require applicants to begin certain cooperation with civil plaintiffs (specifically, the disclosure of relevant facts and documents) "without unreasonable delay" after the court lifts a discovery stay or protective order obtained by the DOJ.

Gibson, Dunn & Crutcher LLP 

Gibson Dunn’s Antitrust and Trade Regulation Practice Group is one of the worlds leading antitrust and competition law practices.  Our antitrust practice numbers well over 100 lawyers located throughout the United States and Europe.  Gibson Dunns attorneys have been involved in representing domestic and international clients in scores of alleged cartel cases, amnesty, leniency and immunity matters, and related civil proceedings.  Global Competition Review has said of Gibson Dunn’s antitrust practice, "No firm is more at the heart of key cartel matters."

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