On 12 April 2013, William J. Baer, Assistant Attorney General (AAG) in charge of the United States Department of Justice’s Antitrust Division (the “Division”), released a statement announcing that the Division will change its practice and no longer publicly list the names of individuals excluded (or "carved out") from the protections afforded by corporate plea agreements. In the statement, the Division also announced that in the future it will limit its use of carve-outs to individuals whom the Division suspects may be guilty of a crime.1 Historically, the Division had also carved out individuals about whom it had not yet made a prosecution decision and those who refused to cooperate with its investigation. The changes announced Friday effectively harmonize the Division’s policy with the United States Attorneys’ Manual, which governs prosecutorial conduct for the DOJ's Criminal Division and the 93 U.S. Attorney’s Offices, and generally requires that prosecutors not publicly identify potential wrongdoers unless and until they are charged.2
In corporate plea agreements with the Division, one of the benefits a company generally receives for pleading guilty is a commitment by the Division not to indict current or former employees, with the exception of certain individuals specifically named in the company’s plea agreement. These plea agreements are typically filed in court and placed on the Division's website, making public the names of the carved out individuals. This practice, which has been upheld by multiple court rulings, can result in negative effects for the individual involved, including reputational harm, employment consequences, public embarrassment, and being named in follow-on civil litigation. These collateral effects have become particularly pronounced in the Internet age. For individuals not suspected of antitrust violations but considered uncooperative by the Division, being named as a carve-out has at times had the effect of suggesting to the public that the Division suspected that the individual was guilty of a crime, even though that may not have been the case.
According to Friday’s announcement, the Division will no longer include the names of carved-out individuals in the plea agreement itself, but will instead list them in an appendix that the Division will ask the court to file under seal. AAG Baer noted that “[ a ]bsent some significant justification, it is ordinarily not appropriate to publicly identify uncharged third-party wrongdoers.”3
Last Friday's announcement also narrows the categories of employees whom the Division will carve out of company pleas. Historically, carve-outs have included three categories of employees: “culpable employees, employees who refuse to cooperate with the Division’s investigation, and employees against whom the Division is still developing evidence.”4 But now, although “[ t ]he division will continue to carve out employees who [ it has ] reason to believe were involved in criminal wrongdoing and who are potential targets of [ its ] investigation [ , ]” it “will no longer carve out employees for reasons unrelated to culpability.”5
The consequences of Friday’s announcement should be felt immediately in ongoing cartel investigations, and should also have important ramifications for future investigations. Executives at companies under investigation will no longer have to fear being carved out and named publicly for their failure to cooperate with the Division’s investigation. Of course, significant incentives to cooperate remain, including obtaining more lenient treatment from the Division and avoiding obstruction of justice charges. The effects of the Division's new policy may be felt most strongly, however, by non-U.S. employees willing to forego travel to countries that place them at risk of extradition. Such employees may no longer need to be concerned about being publicly named by the Division if they refuse to cooperate, unless they are ultimately indicted.