Leniency Fundamentals

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• Leniency Fundamentals
• How to Design an Effective Leniency Program
• Christopher Ries
• Trial Attorney
• Antitrust Division, U.S. Department of Justice
• March 14-15, 2013

The views expressed in this presentation are not
purported to represent those of the U.S.
Department of Justice.
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Leniency Most Important Tool for Uncovering
Price-Fixing Cartels

• Gives full immunity to first qualifying cartel
  member to confess and cooperate no penalties or
  punishment of corporation or its executives
• Powerful tool for detecting cartels
• Creates race to report
• Creates distrust in cartels
• Creates incentives to defect from cartels
• Most large U.S. cartel cases involve leniency
  applications

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Cornerstones of an Effective Leniency Program

• Threat of Severe Sanctions
• Heightened Fear of Detection
• Transparent Application of Program

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Threat of Severe Sanctions

• U.S.
• Prison Terms for Executives
• Criminal Fines
• Treble Damages in Private Civil Actions
• Others - No Prison - Heavier Fines
• Risks Must outweigh Rewards of Crime
• US Model Fear of Individual Culpability

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Threat of Severe Sanctions

• Full immunity only available to the first company
  to self report and meet the conditions of the
  program
• The second company even if second by only a
  matter or minutes or hours and those that
  follow, as well as their executives, face severe
  sanctions

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Fear of Detection

• No Fear of Detection No Incentive to Report
• Tools to Increase Risk of Detection
• Corporate and Individual Leniency Policies
• Cartel profiling
• Proactive effort to investigate suspicious
  activity in adjacent markets or in markets
  involving one or more players from other cartels
• Omnibus question- Are you aware of cartel
  activity in any other market/industry?
• Amnesty Plus
• Penalty Plus Policy

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Transparency

• Explicitly Stated Standards and Policies
• Models and Papers
• Speeches
• Consistency vs. Prosecutorial Discretion
• 20-fold increase in U.S. applications after we
  revised our program to make it more transparent
  and predictable

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U.S. Leniency Program Leniency Steps

• Applicant seeks leniency by approaching Division
• Division confirms leniency is available
• Marker given to secure place at front of line
• Applicant perfects marker. Conditional
  leniency is granted and conditional leniency
  letter provided to applicant.
• Investigation and prosecution of co-conspirators
  continues
• 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.
• Division will not disclose a leniency applicants
  identity, absent prior disclosure by or agreement
  with the applicant, unless authorized by court
  order.
• Division will not disclose to foreign authorities
  information obtained from a leniency application
  unless the leniency applicant agrees to the
  disclosure.
• Division routinely obtains waivers to share
  information with another jurisdiction in cases
  where the applicant has sought and obtained
  leniency from that jurisdiction.