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1. Please give a brief overview of the legislation that allows a leniency programme, the authority that administers it, and the frequency of applications and grants. The Department of Justice Antitrust Division (Antitrust Division) has two leniency policies:

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The Corporate Leniency Policy (also referred to as the amnesty policy or amnesty programme). The current version

• f this policy was introduced in 1993.

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The Leniency Policy for Individuals, issued in 1994. Both policies can be found on the Antitrust Division's website (see box, The administrative authority). The Antitrust Division can apply these policies at its discretion when deciding whether to grant immunity from prosecution to an undertaking or person voluntarily reporting their participation in a criminal violation of section 1 of the Sherman Act 1890. Leniency policies do not apply to civil enforcement by the Antitrust Division or the Federal Trade Commission. The Antitrust Division's application and interpretation of these policies have also been discussed in speeches made by Antitrust Division officials, which can be found on the Antitrust Division's website. The Antitrust Division has estimated that the rate of leniency applications exceeds one per month and that, during at least one period, the rate of applications jumped to three per month. Last year, the Antitrust Division estimated that it had over 50 investi- gations of suspected international cartels pending and that over

• ne half of that number came about as a result of a leniency

application. 2. What infringements of competition law are covered by the le- niency programme? The leniency policies apply to conduct treated as criminal under the anti-trust laws, such as price-fixing, bid-rigging and other conspiratorial conduct involving cartels. 3. Is leniency available to individuals (for example, managers and employees of an undertaking that has been granted le- niency)? Individuals can apply directly for leniency under the Leniency Policy for Individuals. In addition, the officers, directors and employees of an undertaking that receives leniency under the Corporate Leniency Policy (see Question 9), may also benefit from the leniency or immunity that is granted to the undertaking under the Corporate Leniency Policy (see Question 8, Proceed- ings against individuals). 4. Is full immunity from fines available? If so, to whom? An undertaking that is granted leniency under the Corporate Leniency Policy receives full immunity from prosecution and any

• fines. This may also be extended to the officers, directors and

employees of that undertaking (see Question 8, Proceedings against individuals). Similarly, a person granted leniency under the Leniency Policy for Individuals receives full immunity from prosecution and fines

• r imprisonment.

A successful leniency applicant can also substantially reduce the amount of exposure to civil damage claims brought by injured private parties (Antitrust Criminal Penalty Enforcement Act 2004). Instead of potential liability for triple damages, the maximum aggregate recovery in a private civil case against an undertaking granted full immunity is the single damages caused by the sales of that undertaking, provided that they co-operate with the injured parties in accordance with the Antitrust Criminal Penalty Enforcement Act. Moreover, single damages can be difficult for private claimants to prove. 5. Is there a sliding scale of available leniency (for example, full immunity for the first to offer information and reduced leniency for those that subsequently provide additional infor- mation)?

Corporate Leniency Policy

There is no sliding scale under the Corporate Leniency Policy.

United States

Stephen Squeri, Jones Day

www.practicallaw.com/5-201-4597

This chapter was first published in the PLC Cross-border Competition Handbook 2005/06 Volume 2: Leniency and is reproduced with the permission of the publisher, Practial Law Company. For further information or to obtain copies please contact jennifer.mangan@practicallaw.com or visit www.practiallaw.com/leniencyhandbook.

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Only the first undertaking to apply and qualify receives immunity from prosecution and fines. However, an undertaking that does not qualify under the Corporate Leniency Policy can still benefit from co-operation with the Antitrust Division, which can agree to ask a court to impose a fine below the level otherwise recommended by the Federal Sentencing Guidelines in exchange for co-operation and an agreement to plead guilty.

Leniency Policy for Individuals

The Leniency Policy for Individuals is available only if an individual qualifies for leniency in relation to the violation in question before any other person applies and qualifies for leniency under the Leniency Policy for Individuals or an undertaking applies and qualifies for leniency under the Corporate Leniency Policy (see Question 8, Proceedings Against Individuals). However, even if a person does not qualify for immunity under the Leniency Policy for Individuals, the Antitrust Division can decide that a person's testimony has sufficient value to justify granting them "use immunity" independently of the Leniency Policy for Individuals (which usually means non-prosecution for the violation), or that their co-operation is substantial enough to justify recommending a reduced sentence. 6. What conditions must be met for leniency (for example, must the undertaking end its involvement with the infringe- ment and co-operate fully with the authority)?

Corporate Leniency Policy

Certain conditions must be met for leniency to be granted under the Corporate Leniency Policy. The same conditions apply to leniency applications made under Part A of the Corporate Leniency Policy as well as applications made under Part B of the Corporate Leniency Policy (see Question 9). These conditions are:

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Termination of illegal activity. An undertaking must, when it discovers the illegal activity, take prompt and effective action to terminate its part in the activity. The Antitrust Division deems an illegal activity to have been discovered when:

❑

either the undertaking's board of directors or its lawyer (whether in-house or external) first learns of the activity;

❑

the company's lawyer learns of the violation, in the case

• f a closely held company (a privately held company

controlled by a limited number of individuals) in which the directors were involved in the illegal activity. Termination can be accomplished by reporting the illegal activity to the Antitrust Division and refraining from further participation in it, unless the Antitrust Division approves continued participation. It is not necessary to announce withdrawal from the activity to the co-conspirators.

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Complete co-operation and candour. An undertaking must report the wrongdoing with candour and completeness and provide full, continuing and complete co-operation to the Antitrust Division throughout the investigation. The nature of the co-operation expected by the Antitrust Division, as set

• ut in its model leniency letter agreement, includes:

❑

providing a full statement of all facts known to the undertaking relating to the reported activity;

❑

providing, promptly and without being compelled by a subpoena, all documents or other items in its posses- sion, custody or control, wherever located, requested by the Antitrust Division, if not already produced;

❑

using its best efforts to secure the voluntary, complete, candid and truthful co-operation of its current and former directors, officers and employees, and encourag- ing them to provide the Antitrust Division with any infor- mation relevant to possible agreements (such as price- fixing) or other conduct in the relevant industry that vio- lates 15 USC 1;

❑

facilitating the ability of current and former directors,

• fficers and employees to appear for interviews or testi-

monies that the Antitrust Division requires, at the times and places designated by the Antitrust Division;

❑

using its best efforts to ensure that current and former directors, officers and employees who provide informa- tion to the Antitrust Division respond completely, can- didly and truthfully to all questions asked in interviews, grand jury appearances and at trial;

❑

using its best efforts to ensure that current and former directors, officers and employees who provide informa- tion to the Antitrust Division make no attempt either falsely to protect or falsely to implicate any person or entity.

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Confession to be a corporate act. The confession of wrongdo- ing must be a corporate act, as opposed to isolated confes- sions of individual executives. The model leniency letter agreement expressly provides for assistance from the under- taking in securing co-operation, interviews and testimony from officers, directors and employees. The Antitrust Divi- sion acknowledges the practical reality that an undertaking may not be able to secure this, as individuals might be advised by their own lawyer to decline co-operation. This would not necessarily preclude a grant of leniency, but the number and significance of the individuals who fail to co-

• perate will be relevant to its assessment of whether the

undertaking's co-operation has been full, continuing and complete.

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• Restitution. Where possible, the undertaking must make res-

titution to injured parties, which includes injured busi- nesses, government entities and individuals located in the

This chapter was first published in the PLC Cross-border Competition Handbook 2005/06 Volume 2: Leniency and is reproduced with the permission of the publisher, Practial Law Company. For further information or to obtain copies please contact jennifer.mangan@practicallaw.com or visit www.practiallaw.com/leniencyhandbook.

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• US. The Antitrust Division determines whether this has been

done before leniency becomes final, usually at the conclu- sion of an investigation. Most often, this condition is satis- fied by the resolution of civil claims brought by the injured

• parties. Failure to make restitution is excused only when it is

not possible in practice.

Leniency Policy for Individuals

Under the Leniency Policy for Individuals, the only specific condition imposed is that the individual must report the wrongdoing with candour and completeness and provide full, continuing and complete co-operation to the Antitrust Division throughout the investigation. 7. Does the competition authority offer any reduction in fines for activities in one market if an undertaking is the first to disclose restrictive agreements and practices in a second market? The Antitrust Division has introduced a concept called Amnesty

• Plus. Under Amnesty Plus, even though an undertaking does not

qualify for leniency in relation to its involvement in an illegal activity involving a product in one market, the Antitrust Division will recommend a substantially reduced fine for that violation if the same undertaking qualifies for leniency by disclosing evidence of an illegal activity involving a product in another market. 8. Is leniency or immunity available in relation to criminal pros- ecution? If so, please state:

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The circumstances in which leniency or immunity is availa- ble.

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Whether criminal proceedings can be brought against indi- viduals in an undertaking that has been granted leniency or immunity.

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How employees' interests can be protected.

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• Circumstances. The Corporate Leniency Policy and Leniency

Policy for Individuals (see Questions 1 to 6) only relate to leniency from criminal prosecution.

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Proceedings against individuals. If an undertaking qualifies for leniency under Part A of the Corporate Leniency Policy (see Question 9), leniency and immunity from prosecution are also granted (under the Leniency Policy for Individuals) to officers, directors and employees of the undertaking who admit their involvement in the illegal anti-trust activity, with candour and completeness, as part of the corporate confes- sion and continue to assist the Antitrust Division throughout the investigation. If an undertaking qualifies for leniency only under Part B of the Corporate Leniency Policy (see Question 9), the express terms of the Corporate Leniency Policy suggest that officers, directors and employees may be treated differently than under Part A in that leniency is not automatically available even if they are prepared to meet the requirements described in the preceding paragraph, or at least there might be some uncertainty about the availability of leniency for

• them. Officers, directors and employees who come forward

with the undertaking are considered for immunity from crim- inal prosecution on the same basis as if they had approached the Antitrust Division individually. However, despite the uncertainty of protection found in Part B, the practice has generally been to include an undertaking's

• fficers, directors and employees within the protection of the

undertaking's leniency agreement and to grant them immu- nity from prosecution in exchange for their full co-operation. Protection granted to current officers, directors and employ- ees of an undertaking that is granted leniency continues if they leave their employment with that undertaking. An undertaking granted conditional leniency can also seek to have one or more of its former officers, directors or employ- ees included in the grant of leniency.

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Employees' interests. At an appropriate time, depending on all the facts and circumstances as they develop, an under- taking and its lawyer can decide to recommend that certain employees be represented by separate lawyers. In addition, an undertaking can seek to protect the interests of its employees by including them in the undertaking's leniency agreement. 9. Under what circumstances will the competition authority consider an application for leniency (for example, only if, at the time of the application, the authority does not have enough evidence to initiate an investigation or prosecute of its own accord)?

Corporate Leniency Policy

The Antitrust Division considers granting leniency to an undertaking under two circumstances set out in the Corporate Leniency Policy:

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Part A. An application for leniency is made before an investi- gation has begun and the Antitrust Division has not already received information about the illegal activity from another source.

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Part B. An application for leniency is made after an investi- gation has begun and both:

❑

the undertaking is the first to come forward;

❑

the Antitrust Division does not yet have evidence against the undertaking that is likely to result in a sustainable conviction. In each case, certain conditions must be met (see Question 6).

This chapter was first published in the PLC Cross-border Competition Handbook 2005/06 Volume 2: Leniency and is reproduced with the permission of the publisher, Practial Law Company. For further information or to obtain copies please contact jennifer.mangan@practicallaw.com or visit www.practiallaw.com/leniencyhandbook.

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The Antitrust Division may not consider an application for leniency if the applicant coerced others to join, or played a leading role in, the illegal activity (see Question 10).

Leniency Policy for Individuals

An application for leniency under the Leniency Policy for Individ- uals is only considered if both:

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At the time the individual comes forward to report the illegal activity, the Antitrust Division has not yet received informa- tion on the illegal activity from another source.

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An investigation has not yet begun. However, if an individual cannot apply for leniency, he can still seek use immunity from prosecution (see Question 5, Leniency Policy for Individuals).

• 10. Is leniency available if the applicant coerced others to par-

ticipate in the infringement?

Corporate Leniency Policy

Leniency is only available under part A of the Corporate Leniency Policy if the undertaking both:

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Did not coerce another party to participate in the illegal activity.

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Was not the leader or originator of the activity. The Antitrust Division is concerned with whether the applicant was the sole leader or originator as opposed to one of the leaders or

• riginators.

If an application is made under Part B of the Corporate Leniency Policy, the Antitrust Division must consider whether it would be unfair to others to grant leniency to the undertaking applying. Whether the applicant coerced another party or was the leader or

• riginator of the illegal activity are primary considerations in

determining this (along with the timing of the application).

Leniency Policy for Individuals

Leniency is only available under the Leniency Policy for Individ- uals if the applicant was not the leader or originator of the illegal activity (see above, Corporate Leniency Policy).

• 11. Please set out how an application for leniency must be
• made. In particular:

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To which authority should an application be submitted?

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What form of application is used?

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What type of information or evidence are applicants expected to provide?

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Are oral statements permitted?

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Relevant authority. An application for leniency must be made to the Antitrust Division.

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Form of application. There is no particular form of applica-

• tion. Initial contact should be made orally by a lawyer repre-

senting the potential applicant. It is not necessary to identify the applicant until the availability of leniency has been

• explored. Written correspondence between the applicant's

lawyer and the Antitrust Division may follow, if necessary.

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Information/evidence. The applicant should initially supply information on the industry involved in the conspiracy and the general nature of the conspiracy sufficient to allow the Antitrust Division to determine whether it is already investi- gating the conduct in question or whether someone else has already been granted leniency. If leniency is available, the applicant is expected to provide complete co-operation and candour (see Question 6). What this includes varies from case to case but is likely to include the disclosure and pro- duction of relevant documents, the identification of wit- nesses and, in the case of undertakings, assistance in securing the co-operation of officers, directors and employ- ees of the undertaking.

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Oral statements. Oral statements are expected, and the Anti- trust Division does not treat statements made by the appli- cant's lawyer as a waiver of the attorney-client privilege.

• 12. In what circumstances can leniency be withdrawn?

Leniency can be withdrawn if the party granted leniency fails to meet the conditions set out in the leniency letter agreement (see Question 6). General principles of contract law apply. However,

• nce conditionally granted, leniency is rarely withdrawn.

THE ADMINISTRATIVE AUTHORITY

United States Department of Justice, Antitrust Division

Person/department to apply to. Scott Hammond (Deputy Assistant Attorney General) Contact details. 950 Pennsylvania Avenue, NW Washington, DC 20503 United States T +1 202 514 3543 W www.usdoj.gov/atr Procedure for obtaining application documents. There is no particular form of application. Initial contact should be made

• rally by a lawyer representing the potential applicant. If no

investigation is planned, a formal application can be made.

This chapter was first published in the PLC Cross-border Competition Handbook 2005/06 Volume 2: Leniency and is reproduced with the permission of the publisher, Practial Law Company. For further information or to obtain copies please contact jennifer.mangan@practicallaw.com or visit www.practiallaw.com/leniencyhandbook.

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• 13. What is the scope of leniency protection (for example, does

it apply only in so far as the infringing activities are revealed in information provided by the applicant to the competition authority, or also where further evidence of infringement is collected by the authority)? If the investigation by the Antitrust Division leads to evidence of illegal activity not covered by the conditional grant of leniency, the undertaking can be prosecuted for that conduct, depending

• n all of the facts and circumstances.
• 14. In relation to confidentiality:

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Is the identity of a leniency applicant disclosed during an investigation or in a final decision?

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Is information provided by a leniency applicant passed on to other undertakings under investigation?

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Can a leniency applicant request confidentiality of its iden- tity or information provided?

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Identity disclosure. Antitrust Division policy is not to dis- close the identity of a leniency applicant unless a court

• rders it to make the disclosure.

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Information disclosure. The Antitrust Division has said that it will not disclose the information provided by a leniency applicant to a foreign government unless the applicant con- sents to the disclosure. The information may be used by the Antitrust Division in connection with the investigation of

• ther undertakings. However, in the absence of a disclosure

by the leniency applicant or a court order requiring disclo- sure, the Antitrust Division's policy is not to disclose the identity of the leniency applicant or information that it has supplied.

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Confidentiality requests. As Antitrust Division policy is not to disclose the identity of an applicant or information supplied by the applicant, an applicant can expect that the Antitrust Division will favour a request for confidentiality, but subject to any future court order requiring disclosure.

• 15. Can statements made in support of leniency in foreign juris-

dictions be made subject to discovery orders in your courts? Statements made in support of leniency in foreign jurisdictions are not automatically protected from a discovery order by a US court and there is no clear precedent on this matter. For example, in In Re Methionine Antitrust Litigation (No. C-99-3491 CRB (SCS) (N.D. Cal. 29 July 2002)), the US district court denied a request for the discovery of a leniency application made to the EC, but a similar request for a discovery order was allowed in In Re Vitamins Antitrust Litigation (Misc. No. 99-197 (TFH) (D.D.C. 18 December 2002)).

This chapter was first published in the PLC Cross-border Competition Handbook 2005/06 Volume 2: Leniency and is reproduced with the permission of the publisher, Practial Law Company. For further information or to obtain copies please contact jennifer.mangan@practicallaw.com or visit www.practiallaw.com/leniencyhandbook.