The Department of Justice Antitrust Divisions Amnesty Program

Presented by: Nathan Cao

Introduction
Not many people are aware that the Department of Justice prosecutes antitrust violations criminally, often imposing punitive fines and
imprisoning individuals.

Basically, everyone is a victim

before they finish breakfast

Antitrust Law
Sherman Act 1 and 2 are the principal statutes that criminalize antitrust violations in the United States.

Sherman
Act
Sherman
Antitrust
Act

1
"Every contract, combination in the form of trust
or otherwise, or conspiracy, in restraint of trade
or commerce among the several States, or with
foreign nations, is declared to be illegal."

Per Se Violations
- No inquiry into its effects or any business
justifications for the behavior
- Includes price-fixing, bid rigging and market
allocation schemes
- CRIMINALLY PROSECUTED

2
"Every person who shall monopolize, or attempt
to monopolize, or combine or conspire with any
other person or persons, to monopolize any part
of the trade or commerce among the several
States, or with foreign nations, shall be deemed
guilty of a felony

Rule of Reason Violations

- Suspect practices that may have business
justifications or positive effects on
competition
- Rarely ever criminal prosecuted

The Amnesty Program

The Amnesty Program consists of several components and requires applicants to satisfy several criteria before they can receive
immunity from prosecution.

Amnesty Program

Amnesty Plus

Corporate Leniency

Personal Leniency

Amnesty Plus

- Not charging the entire firm criminally for

the violation reported
- All directors and employees are granted
immunity as well
- Requirements for before an investigation
has begun are:
(1) Must be the first to report
(2) Upon reporting, must promptly
and effectively end participation
in the conspiracy
(3) Full cooperation throughout
(4) Must be a corporate act
(5) Restitution to injured parties
(6) Not the ringleader
- Alternative requirements for after an
investigation has begun are available

- Not charging the individual criminally for

the violation reported
- Requirements are:
(1) Must be the first to report
(2) Full cooperation throughout
(3) Not the ringleader
- Those who do not qualify can still be
considered on a case-by-case basis

- Lowers punishment for a corporation too

late to apply for amnesty for one
conspiracy if they come forward and admit
participation in a different conspiracy
- Considerations for lowering punishment
are:
(1) Quality of the evidence and
extent of cooperation in the
second conspiracy
(2) Size and seriousness of the
second conspiracy
(3) Likelihood that the DOJ would
have discovered the second
conspiracy on their own
eventually

Origins and Justifications

The Amnesty Program has been in existence for a long time and is a necessary component of the DOJs enforcement effort due to the
secretive nature of antitrust conspiracies.

Justifications for Amnesty

1993

Amnesty Program revised:

(1) Automatic leniency if
requirements met
(2) Add possibility of
leniency even after
investigation started
(3) Leniency for directors
and employees of
corporation
(4) Added personal
leniency program

Conspiracies are Secretive

Cartels are secretive by nature and are difficult to
detect without help from insiders.
No Obvious Victims
It is often difficult for victims to even realize they
have been harmed by cartel behavior, especially if
the victims are consumers in general.
Less Scrutiny

1978

Original Amnesty Program

originally conceived and
implemented

Cartels often arise in industries where goods are

homogenous and attract very little attention. This
often means that these industries get less scrutiny
from officials and consumers.

Review of the Programs Efficacy

The Amnesty Program has been highly successful in bringing cartels to justice. This success has led both other jurisdictions to adopt
similar approaches and the corporate world to adopt processes to discover and eliminate cartel behavior.
Generates More Investigations

Imitation by Other Jurisdictions

Altering Corporate Behavior

Many more companies and individuals now

come forward, generating more
investigations.

Many other countries are now instituting

their own Amnesty Programs.

Companies are now implementing their own

procedures to root out and eliminate anticompetitive behavior.

More Punishments
As a result of having more investigations and better information, the Antitrust Office has been able to increase the frequency and
severity of punishments on both corporations and individuals.

% of Defendants Jailed

25 24

24

2009

2008

2007

2005

2004

12

2006

21

2003

15

18

2002

2009

2008

2007

2006

10

2000

20

0%
2005

31

30

10
2004

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

$0

40

20%
2003

$280
$400
$152
$75$107
$200

2002

$701
$630
$473
$350$338

$800
$600

87%
80%
71%67%68%
80%
61%
53%50%
46%
60%
38%
40%

100%

2001

$1,000

2000

$1,200
$1,000

Length of Jail Time

(Months)

2001

Criminal Fines (Millions)

Review of the Programs Efficacy

The success of the Amnesty Program is due to a number of factors: proper incentivization, certainty of punishment and transparency.

Proper Incentivization
Creates a race among
companies in the
conspiracy to give
each other up if there
are signs of trouble
Creates a race among
the company and its
employees as well
Harsh individual
punishments
incentivizes
companies and
individuals to confess
Amnesty Plus and
Penalty Plus
incentivize reporting
of all violations

Certainty of Punishment

Whistleblowers
greatly increase the
fear of discovery and
punishment
Many more
defendants are now
receiving jail time
sentences (and for
longer terms)
Fines for companies
are now increasing,
creating a greater
threat to financial
stability

Transparency

Automatic leniency
upon qualifying for the
Amnesty Program
generates more
certainty, encouraging
cooperation

The Antitrust Office

provides clear guidance
on the requirements to
qualify for amnesty so
that companies know
exactly how to comply
with them

Views of DOJ Attorneys

The DOJs antitrust attorneys acknowledge that although the Amnesty Program is not perfect, it allows them to prosecute more
violators than they would be able to without it.

A Necessary Evil
Completely in support of the program

Better to allow one company to get off and

prosecute multiple offenders than to never get
the chance to prosecute any of them

Its not a question of how many companies

we can prosecute, but whether or not we are
able to prosecute any at all

From 1997-2014, $9 billion in criminal fines

were collected, 90% of them were from the
Amnesty Program

Prosecutorial Discretion
While I do lose some discretion, there is still
plenty of areas where I have room to apply my
discretion
The Amnesty Plus program allows me to
exercise my discretion in deciding how to
lower punishment for the cooperating
offender
I still get to evaluate the quality and extent of
information that offenders provide in order to
determine whether to carve them in or
carve them out

My Views of the Amnesty Program

My belief is that the Amnesty Program is necessary for the DOJ to be effective in discovering and prosecuting antitrust violations.

Conspiracies really are difficult to

detect without any insider
sources.

There should be some culpability

threshold for offenders who
come in seeking leniency.

The results speak for themselves.

The Amnesty Program clearly has
improved antitrust enforcement.

Size and quality of the second

conspiracy should not be a
consideration for Amnesty Plus