Ready, Set, Report & Remediate: DOJ Revises Leniency Policy for Criminal Antitrust Enforcement

The Antitrust Division of the U.S. Department of Justice announced an update to its leniency policy for criminal antitrust enforcement on April 4, 2022, along with an accompanying set of updated FAQs. The updates effectively raise the bar for corporate leniency applicants by requiring that the applicant “promptly reports” the violation, as well as by requiring that the applicant remediate the effects of its conduct and take other steps to address future antitrust risk.

Assistant Attorney General for Antitrust Jonathan Kanter, speaking at a summit of antitrust enforcers, explained that “[a] company that discovers it committed a crime and then sits on its hands hoping it goes unnoticed does not deserve leniency.” He also noted the Leniency Program will now be spelled out in the Justice Manual, and that “to qualify for leniency, a company must now undertake remedial measures to redress the harm it caused and improve its compliance program.”

Criminal antitrust enforcement incentivizes self-reporting from cartel participants through the leniency program by offering amnesty to corporations and individuals who cooperate fully in the resulting investigations. As well, the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA) provides a successful leniency applicant a reduction in civil damages if it provides timely and satisfactory cooperation to private plaintiffs.

First, the Division now requires that the leniency applicant “promptly reports” the illegal activity upon discovery. Previous iterations of the leniency policy incentivized reporting by making full leniency available only to the first applicant to report cartel activity, setting up a race to report among cartel participants. The new policy adds an additional incentive to get into the Division’s door before leniency disappears.

As the revised FAQs explain, the clock begins to run when an organization’s authorized representative (such as its board of directors, inside or outside counsel, or compliance officer) is first informed of the conduct at issue. An organization may still receive leniency if it “conducts a preliminary internal investigation in a timely fashion” before self-reporting. But if it fails to investigate further after learning of potential illegal activity, it will be ineligible for leniency. This is the case even if the applicant did not realize that its conduct was criminal.

Second, the updates add two requirements aimed at demonstrating that the applicant has addressed its future antitrust risk and remediated the effect of its criminal conduct:

• The leniency applicant must now use “best efforts” to “remediate the harm caused by the illegal activity.” Previously, applicants were required to pay restitution to parties injured by the cartel. The new remediation requirement adds to the restitution requirement and is meant to address any harms it does not cover. It is also meant to guard against the possibility of future harms. As the FAQs explain, remediation may require a “root cause analysis” of the underlying causes of the illegal activity, and remedial efforts to address any root causes.
• The leniency applicant also must use best efforts to “improve its compliance program to mitigate the risk of engaging in future illegal activity.” Encouraging compliance programs is already an important part of the Division’s enforcement efforts. For example, in July 2019, the Division announced that it would consider corporate compliance programs when deciding whether and to what extent to bring charges against criminal antitrust conduct. Now, it also will consider an organization’s compliance program as part of leniency considerations, including both the program in place at the time of the illegal activity and any changes or improvements made as a result.

These recent changes underscore the importance of an effective antitrust compliance program, and of prompt investigation into any conduct that may potentially cross the line into cartel behavior.

Businesses considering the leniency program or concerned about how recent developments will impact their antitrust risks are strongly advised to consult with legal counsel.