Transcript Document

John W. McReynolds
Assistant Chief, New York Field Office
Antitrust Division, U.S. Department of Justice
Judicial Training Program
Moscow, Russia
July 8-9, 2010
To be used for training purposes only. The views expressed in this presentation are not necessarily those of the United
States Department of Justice
Program Topics
• U.S. Cartel Settlements & Penalties
• U.S. Leniency Program
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U.S. Cartel Settlements and Penalties
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U.S. System of Negotiated Plea Agreements
Benefits of Plea Agreement to the Division include:
•
Obtain cooperation
•
Expedite and advance investigations
•
Resolve cartel cases quickly without the need for
litigation
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U.S. System of Negotiated Plea Agreements
Benefits of Plea Agreement to the Defendant include:
•
A degree of certainty about the sentence
•
Rewards for early cooperation
•
Final and definitive resolution of the matter
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U.S. System of Negotiated Plea Agreements
Plea Agreement Basics:
•
Defendant must admit to participation in the charged conduct
•
Defendant must waive certain rights (e.g., right to be charged
by Indictment; right to plead not guilty)
•
Defendant must agree to cooperate fully
•
Plea Agreement is disclosed in open court
•
Plea Agreement must be in writing
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U.S. System of Negotiated Plea Agreements
Key Issues in plea negotiations in cartel cases:
1.
Who will have to plead guilty?
2.
What violations will be charged?
3.
What will be the scope of the antitrust charge?
4.
What cooperation will the defendant provide?
5.
What will be the sentencing recommendation of the parties?
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U.S. CARTEL MAXIMUM PENALTIES
Corporation:
• $100 million fine
Individual:
• $1 million fine and 10 years in prison
Alternative Maximum Fine per 18 U.S.C. § 3571(d):
Twice the pecuniary gain from the crime or twice the pecuniary
loss to the victims of the crime, whichever is greater
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U.S. Cartel Penalties
•
Sentencing goals: punishment and deterrence;
incentives for corporations
•
Fines against corporate defendants based on
seriousness of offense & culpability of organization
•
Jail is the most effective deterrent and
punishment for individuals
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U.S. Cartel Penalties
Antitrust Division’s Record of Deterrence
•
Jail sentences – record highs
in incarceration rates
•
Over $ 1 billion in corporate fines imposed
in fiscal year 2009
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U.S. Cartel Penalties
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U.S. Cartel Penalties
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U.S. Cartel Penalties
Criminal Antitrust Fines
$1
Billion
$701
Million
$630
Million
Fine
Totals
$473
$350
Million
$280
Million
$338
Million
Million
$152
Million
2000
2001
$75
Million
2002
$107
Million
2003
2004
2005
2006
2007
2008
2009
Fiscal Year
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U.S. Cartel Penalties
Sentences for antitrust offenses
•
DOJ prosecutors recommend sentences based on
United States Sentencing Guidelines
•
Sentencing Guidelines are advisory, not mandatory, but
court must still consider them
–
United States v. Booker, 543 U.S. 220 (2005)
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U.S. Cartel Penalties
Factors considered for sentencing include
For Individuals and Corporations:
•
Offense of conviction
•
Defendant’s volume of affected commerce (antitrust)
•
Defendant’s criminal history
•
Defendant’s role in the offense
•
Any obstruction of justice, including perjury
•
Defendant’s cooperation – “substantial assistance” may reduce
sentence
•
Defendant’s acceptance of responsibility
Also for Corporations:
•
Size of the organization
•
Involvement of high-level personnel in the offense
•
Compliance and ethics program
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U.S. Cartel Penalties – Example: Individual
Assume:
1.
Corporation had sales of $300 million of affected product
during the duration of the conspiracy
2.
Agreement was to rig bids
3.
Defendant was an organizer that involved 5 or more
participants (aggravating role)
4.
Defendant destroyed documents (obstruction of justice)
5.
Defendant pleaded guilty before trial
6.
Defendant had no prior convictions
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U.S. Cartel Penalties – Example: Individual
1.
2.
3.
4.
5.
6.
7.
Base offense level - antitrust:
Bid-rigging:
Volume of commerce
> $250 million, < $500 million
Organizer, > 5 participants
Obstruction
Acceptance of responsibility
No criminal history
TOTAL
12
+ 1
+10
+ 4
+ 2
- 3
____
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U.S. Cartel Penalties
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U.S. Cartel Penalties – Example: Corporation
Assume:
1.
Corporation had sales of $300 million of affected product
during the duration of the conspiracy
2.
Corporation had 1,000 employees
3.
High level executive participated in the cartel
4.
Corporation accepts responsibility by pleading guilty
prior to the start of a trial
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U.S. Cartel Penalties – Example: Corporation
1.
2.
Base fine: 20% of $300 million, or $60 million
Culpability score
(1) start with 5 points
(2) add 4 points, more than 1,000 employees and high
level executive participated
(3) subtract 2 points, acceptance of responsibility
Total = 7, Minimum multiplier is 1.4, Maximum multiplier is 2.8
Minimum fine = $60 million x 1.4 = $84 million
Maximum fine = $60 million x 2.8 = $168 million
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U.S. Leniency Program: Basics
• Leniency means full immunity
• Leniency is only available to first company
to qualify
• Leniency is only available for horizontal
hard core conduct (e.g., price-fixing, bidrigging, customer/market allocation)
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U.S. Leniency Program: The Benefits of Leniency
• Most effective investigative tool
• Amnesty applicants are best source of evidence
• Case generator
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U.S. Leniency Program:
Incentives for Cartel Participants
• Company avoids criminal fine
• Cooperating directors, officers, employees avoid
fine and jail
• Detrebling of civil damages
The catch: Only first to qualify gets it
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1993 Revision of Antitrust Division’s Leniency Program
1. Leniency is automatic before an investigation has begun as long
as the applicant meets all criteria.
2. Alternative leniency is available even after an investigation has
begun if certain criteria are met.
3. All cooperating Directors, Officers, and Employees of qualifying
corporation also receive leniency.
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Corporate Leniency Policy
Two types of corporate leniency are available:
1. Part “A” Leniency:
Granted before a criminal antitrust investigation has begun.
2. Part “B” Leniency:
Available if an applicant cannot meet all requirements of Part “A”
leniency (e.g., the applicant reports the activity after a criminal
antitrust investigation has already begun).
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Corporate Leniency: Key Conditions
• Policy requires applicant not be “the leader in, or originator
of” the illegal activity.
• The corporation, upon its discovery of the illegal activity
being reported took “prompt and effective action to
terminate its part in the activity.”
• Obligation to cooperate throughout investigation
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U.S. Leniency Program: Leniency Steps
1. Applicant seeks leniency by approaching Division
2. Division confirms leniency is available
3. “Marker” given to secure place at front of line
4. Applicant “perfects” marker. Conditional leniency is granted and
conditional leniency letter provided to applicant.
5. Investigation and prosecution of co-conspirators continues
6. Final leniency granted
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U.S. Leniency Program: Confidentiality Policy
• Division will treat as confidential the identity of leniency
applicants and any information obtained from the applicant.
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U.S. Leniency Program: Lessons Learned
Leniency programs will only be effective to combat cartels if:
• Program is inclusive rather than exclusive
• Predictable and transparent enforcement policies
• Incentives to report
– Coverage for related corporate entities/individuals
– Confidentiality
• Leniency Policy is known to public
– Antitrust Division website
– Presentations to private bar
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