It is widely rumored that the U.S. Antitrust Division of the Department of Justice (“Antitrust Division”) is already working toward its next wave of international cartel investigations. The blockbuster auto parts investigation has netted massive fines, jail time, and fugitives, and spawned ripple investigations globally, from China to South Africa.1 As prosecutions continue and those caught in the net continue to struggle, critical lessons emerge, and not just for the defense. Significantly, the Antitrust Division has been speaking out on compliance, cooperation, and serial offenders.

Those in the trenches see signs that the tidal wave of Antitrust Division auto parts investigations are starting to recede. And the Antitrust Division has promised that we should expect to see enforcement activity in a new area soon.2 Yet, what could be bigger than auto parts? So far in the U.S. alone:

  • 31 corporate guilty pleas
  • $2.4 billion in fines
  • 20 individuals sentenced to one to two years in jail
  • 26 additional individuals charged, most remaining fugitives outside the U.S.
  • civil class-action settlements in the millions.

As the Antitrust Division moves forward, it is implementing new policies and practices. The newest message from the Antitrust Division is a refinement of its “carrot and stick” approach to promote greater deterrence and self- reporting, with an emphasis on new “sticks.”

The Division wants:

  • To induce effective corporate compliance programs.
    • The new “stick” is that the sentencing of any company without an adequate program will include, at a minimum, probation with a mandated compliance program and, in the most egregious circumstances, imposition of a monitor who would be paid by the company and report to the government.
    • Potentially a new “carrot” is under consideration.
  • “Cooperation” to include full disclosure of any collusion problems unknown to the Division.
    • The new “stick” is an enhanced fine (Bridgestone paid an extra $100 million after it “cooperated” on marine hoses without disclosing collusion on auto parts).
    • The “carrot” remains “amnesty plus.”
  • Companies to pressure individuals not only to cooperate but also to plead guilty and go to jail.
    • The new “stick” is that continuing to employ carve-outs (employees not protected from prosecution by the corporate plea agreement) or other corporate individuals who refuse to cooperate with the Division may subject the company to probation or a monitor as part of its sentence.
    • The “carrot” remains that the value of a company’s cooperation credit in computing the fine can be increased by information from cooperating individuals.

The Antitrust Division has long espoused that prosecution of individuals is necessary for meaningful deterrence. The Division’s position has always been that individuals are the only true actors, and they need to understand and accept personal responsibility for their conduct. The new message from the Division focuses on pushing companies to enable and induce individuals to comply and find new ways to increase self-reporting of misconduct.3

Traditionally, the Division has taken the view that the avoidance of high fines should be adequate incentive to implement compliance training. Thus, the Division highlighted its push for high fines as tantamount to incentivizing compliance training. Similarly, the Antitrust Division pointed to its leniency program as a means to incentivize corporate spending on compliance, arguing that a company with an effective compliance program would be better able to learn of its problems and fix them through an amnesty application. The Division appears now to be recognizing that for companies to justify the type of extensive compliance training and auditing that is most effective may require more. In calculating a corporate fine, the Antitrust Division still does not give any credit for a compliance program, regardless of how meaningful, but perhaps some recognition of those corporate efforts will come.

The Division will not negotiate a plea agreement with a recommended fine without a company’s commitment to cooperate with the Division’s investigation moving forward. Similarly, company employees seeking to be protected from prosecution by a corporate plea must cooperate or forfeit that protection. It has long been known that the Division wants companies to pressure individuals to cooperate and to plead, but the Division’s aggressive stance on continuing employment of carve-outs may go too far. Some carved-out individuals may never be charged, and all are presumed innocent under the law until proven guilty. Continued employment of an individual carved out of the company plea agreement but never charged with any offense does not necessarily reflect on corporate acceptance of responsibility for past misconduct or suggest future cartel behavior will occur. While the Division claims to limit its condemnation of continuing employment to when the Division believes (1) the employment could have an undue influence on the cooperation of others, or (2) puts the carved-out individual in a position to affect sales and pricing, the Division’s policy has the effect of punishing individuals without trial and involving the Division in employment issues beyond its expertise or authority.