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Immunity and leniency

Immunity and leniency programmes

Is an immunity and leniency programme available for companies? If so, how does it operate?

Yes. The Department of Justice (DOJ) has adopted a leniency programme, which provides complete immunity from criminal prosecution for the first company or individual that reports cartel conduct and meets the other leniency requirements (described below). The DOJ permits an applicant to place a ‘marker’, which holds an applicant’s place in line while it gathers more information to support its request for leniency. On perfecting a marker, the Antitrust Division of the DOJ will issue a conditional leniency letter. The Antitrust Division will usually issue a final, unconditional leniency letter only after the completion of the investigation and any resulting prosecutions of the applicant’s co-conspirators.

To obtain leniency before the DOJ has commenced an investigation (Type A leniency), an applicant must satisfy the following six conditions:

  • The DOJ must not yet have received information about the activity from another source.
  • The company must take prompt and effective action to terminate its role in the illegal activity.
  • The company must report the illegal activity with candour and completeness and provide continuous cooperation throughout the investigation.
  • The company must confess a truly corporate act (as opposed to having isolated confessions from individual officers or directors).
  • The company must make restitution where possible.
  • The company must not have been the ringleader of the illegal activity or coerced another party to participate. 

If the DOJ has already opened an investigation, a company may still be eligible for Type B leniency if it satisfies the following seven conditions:

  • The company must be the first to come forward and qualify for leniency with respect to the illegal activity.
  • The DOJ must not yet have received evidence against the company that is likely to result in a sustainable conviction.
  • The company must take prompt and effective action to terminate its part in the illegal activity.
  • The company must report the illegal activity with candour and completeness and provide continuous cooperation throughout the investigation.
  • The company must confess a truly corporate act (defined above).
  • The company must make restitution where possible.
  • The Antitrust Division must determine that granting leniency would not be unfair to others.

Can the enforcement authority decline or withdraw leniency? If so, on what basis?

Yes. The DOJ can decline leniency if an applicant does not satisfy the conditions listed above. Similarly, the DOJ can revoke an applicant’s conditional acceptance into the leniency programme if it determines, before granting a final unconditional leniency letter, that the applicant either is not eligible for leniency or has not provided the cooperation required in the conditional leniency letter. Similarly, the DOJ may revoke any conditional leniency, immunity or non-prosecution agreement granted to a director, officer or employee of a corporate leniency applicant if it determines that the employee has:

  • failed to fully comply with his or her obligations under the letter;
  • caused the corporate applicant to be ineligible for leniency;
  • continued to participate in the illegal activity after the corporation took action to terminate its participation and instructed the individual to cease his or her participation; or
  • obstructed or attempted to obstruct an investigation into the illegal activity.

Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?

Yes. Companies and individuals that do not qualify for leniency, but that admit wrongdoing, agree to cooperate and enter into a plea agreement, may be eligible for more lenient treatment by the DOJ. The extent of the benefits will depend on the timing, value and completeness of the cooperation.

In addition, under the Leniency Plus programme, the DOJ will provide more lenient treatment in one cartel investigation if a party is the first to disclose the existence of a second cartel. 

What benefits (if any) are available for employees and former employees of a company that seeks leniency?

Existing employees (ie, existing directors, officers and employees) of a company that qualifies for Type A leniency will receive leniency if they admit their wrongdoing with candour and completeness and continue to assist the DOJ throughout the investigation. Existing employees who do not cooperate during the investigation will be ineligible for leniency protections. For companies that qualify only for Type B leniency, the DOJ reserves the right to prosecute any existing directors, officers and employees whom it determines to be ‘highly culpable’.

For Type A and Type B leniency, former employees (ie, former directors, officers and employees) are presumptively excluded from any grant of corporate leniency. However, the DOJ may exercise discretion to include specific former directors, officers and employees of the company in the corporate conditional leniency letter for non-prosecution protection or, alternatively, in a separate non-prosecution agreement. To be eligible for such protections, former directors, officers and employees must provide substantial, non-cumulative cooperation against remaining potential targets, or their cooperation must be necessary for the leniency applicant to make a confession of illegal activity sufficient to be eligible for conditional leniency. Eligible former directors, officers and employees must provide full, truthful, continuing and complete cooperation throughout the investigation and resulting prosecutions.

Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?

Individuals may apply for leniency in the same manner as described above for companies.

Have there been any notable recent cases in which a leniency application was the subject of adjudication?

In the United States, the decision whether to grant leniency is a matter of prosecutorial discretion subject to only limited judicial review. However, the courts have assessed whether the DOJ breached the agreements contained in a letter conditionally granting leniency. Stolt-Nielsen, a Luxembourg shipping company, admitted to participating in a conspiracy to allocate customers, fix prices and rig bids in conjunction with two other shipping companies. The company sought and received conditional leniency after the DOJ had already started its investigation. Despite the company’s cooperation in providing highly incrimination evidence regarding the conspiracy, the DOJ ultimately concluded that Stolt-Nielsen had not ended its illegal activities “promptly” and had instead continued to participate in anti-competitive conduct. The DOJ revoked the company’s leniency.

In subsequent legal proceedings, defendants moved to dismiss the indictments of the company and two of its executives, asserting as a defence that the DOJ violated the non-prosecution agreement. The court found that the DOJ had violated the agreement and dismissed the indictment, concluding that the DOJ bears the burden of demonstrating that a defendant materially breached a non-prosecution agreement and that the most important factor in determining whether a breach is material is the incriminating nature of the evidence provided by the defendant. 

Criminal liability

Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?

Yes. Immunity is available under the circumstances described above.

Application procedure

What is the procedure for a leniency application?

A leniency applicant should contact the Antitrust Division’s deputy assistant attorney general for criminal enforcement to request a marker, which holds its place at the front of the line for leniency.

What is the typical timeframe for consideration of a leniency application?

If a marker is available, the DOJ will typically provide the applicant with 30 days within which to perfect its leniency application. In its discretion the DOJ may extend this period if the applicant demonstrates that it is making a good-faith effort to complete its application in a timely manner.

What information and evidence is required?

To obtain a marker, a leniency applicant’s counsel must:

  • report that he or she has discovered information indicating that the client has engaged in a criminal antitrust violation;
  • disclose the general nature of the conduct;
  • identify the industry, product or service involved in terms specific enough to allow the DOJ to determine whether leniency is available; and
  • identify the client.

After the DOJ grants a marker, the applicant will attempt to perfect its leniency application for either Type A or Type B leniency, per the process described above.

What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?

Without the agreement of the leniency applicant, the Antitrust Division will not publicly disclose the applicant’s identity or information it provided unless required to do so by court order.

What level of cooperation is required from applicants?

Applicants for leniency must report the illegal activity with candour and completeness and provide full, continuing and complete cooperation to the Antitrust Division throughout the investigation. To the extent that the application is made by a company, the applicant’s confession must be a corporate act, as opposed to one composed of isolated confessions from individual executives. In addition, the applicant must provide documents, information and materials discovered during the investigation, use its best efforts to secure the cooperation of its current directors, officers and employees and pay restitution to its victims.

What confidentiality protection is offered to applicants?

The Antitrust Division treats the identity of and information provided by leniency applicants as confidential and will not publicly disclose the identity of a leniency applicant or information provided by the applicant unless the applicant consents or a court order requires disclosure. The Antitrust Division also will not disclose information obtained from a leniency applicant to foreign antitrust agencies unless the applicant first agrees to the disclosure.

Can the company apply for a marker? If so, under which conditions?

Yes. The conditions for obtaining a marker are described above.

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