On June 19, 2009, President Obama signed into law a bill that extends for one year (until June 22, 2010) a provision of the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (“ACPERA”) which limits liability in civil “follow-on” actions for amnesty applicants under the Department of Justice (“DOJ”) Antitrust Division’s Corporate Leniency Program (the “Leniency Program”).1 The law provides, inter alia, that a successful applicant not only is granted amnesty from criminal prosecution, but also limits liability to single (not treble) damages in private actions, and the amnesty applicant avoids joint and several liability (i.e., the applicant can only be held liable for the damages that the applicant caused).
The Leniency Program has been extremely effective for the DOJ Antitrust Division in detecting cartels and prosecuting them.2 Under the Corporate Leniency Program, an amnesty applicant can avoid criminal prosecution for the company and its employees if it confesses its involvement in an antitrust conspiracy and cooperates with the prosecution. Prior to the ACPERA, however, companies had to weigh the benefits of obtaining leniency from criminal prosecution against the consequences of being exposed to treble damages in follow-on civil actions. Although participation in the Amnesty Program is kept confidential by the Division, the conventional wisdom prior to ACPERA was that amnesty participation in criminal investigations would ultimately be revealed and thereby lead to the onslaught of private suits. Therefore, amnesty protection limited to criminal prosecution was insufficient. The provision that limits an amnesty applicant’s liability in private actions was originally enacted as part of ACPERA, which Congress passed at the DOJ’s request to expand the Antitrust Division’s powers to investigate and prosecute companies and individuals suspected of violating the antitrust laws.3 The original bill contained a “sunset” provision requiring expiration on June 22, 2009 of the provisions that limit liability in civil follow-on actions, in the absence of a legislative extension.4 The recent legislation has now extended the ACPERA for one more year.
The sponsors of the recent legislation to extend this provision, Senator Kohl (D-Wis.) and Representative Johnson (D-Ga.), touted the provision’s benefits in assisting the prosecution efforts of the Division. With the sponsors’ strong support, the legislation to extend the sunset provision moved quickly through Congress. In particular the bill was viewed as a critical component to induce reluctant whistleblowers to avoid potentially cataclysmic treble damage awards. However, even though the Antitrust Division was a strong proponent of the bill, the Division did not provide empirical evidence to support the high praise the bill received, nor did any of its Congressional sponsors. This lack of data is surprising because presumably it would be beneficial for the Antitrust Division to raise questions post ante with amnesty participants, to understand their motivation in entering the program and to track the recoveries attributable to whistleblowers’ revelations (e.g., as DOJ does by tracking recoveries resulting from whistleblower complaints initiated under the federal False Claims Act).
So what is the impact of the recently-enacted law on companies doing business in the United States? The law—at least for another year—significantly limits potential civil damages, but it is relief that only extends to the first company to apply for amnesty. Unlike the EU model where varying degrees of protection are given to multiple amnesty applicants, the Antitrust Division’s program is simple—first or not at all. The Antitrust Division takes the position that second or subsequent entities that apply for amnesty can also obtain significant benefits (e.g., certain discounts off the Sentencing Guidelines range of applicable criminal fines), but only the first applicant is eligible for amnesty from criminal penalties.5
The ACPERA benefits necessarily force companies to act quickly once there is a belief that anticompetitive conduct has occurred. All senior corporate mangers need to be mindful of the “need for speed.” Companies that believe that potential antitrust violations may have occurred should immediately contact in-house counsel and outside counsel to determine whether to conduct an internal investigation. In order to “hold” its place in line as the first amnesty applicant, a company is permitted to hold a “marker.” If an internal investigation then reveals unlawful conduct, the company must make a reasoned decision on whether to apply for amnesty, because ACPERA provides widespread protection, but only for the first company to apply for amnesty.