Deputy Assistant Attorney General Scott Hammond of the U.S. Department of Justice’s Antitrust Division recently spoke to a group from the State Bar of Michigan’s Antitrust, Franchising & Trade Regulation section. His presentation addressed the automotive parts antitrust investigation, which he described as an “active” ongoing investigation. Indeed, the auto parts investigation is the biggest criminal antitrust investigation in history. To date, twelve individuals and nine companies have plead guilty and $809 million in total fines have been assessed. Hammond attributed the DOJ’s successful investigation to several things including the coordination between global enforcement agencies on 4 continents; raising the stakes for antitrust crimes in the form of fines and increased prison sentences; increased prosecution of individuals; use of wire tapping authority; and, perhaps most important, incentivizing companies to conduct their own internal investigations to win the “race to leniency.”
Mr. Hammond described the Corporate Leniency and Amnesty Plus programs in detail and attributed the “race to leniency” as the factor that has “destabilized the cartels” and served as a deterrent to anti-competitive conduct. The DOJ Antitrust Division’s Corporate Leniency program covers the company and its individuals. The single most important factor to qualify for leniency is being the first to disclose. In addition, leniency also requires a demonstration of prompt and effective termination of the conduct; cooperation; a truly corporate act (as opposed to isolated individual conduct); restitution; and no coercion, i.e., not the leader or originator of the conduct. If a company qualifies for leniency: 1) no charges will be brought against the company or the individual; 2) there will be no fines or jail time; 3) the company will be eligible for reduced civil damages; and 4) a confidential policy protecting applicant’s identity and information will be put in place. Mr. Hammond also described the Amnesty Plus program. In this instance, the company has already lost the race for leniency with respect to Product A. The company agrees to cooperate on Product A, but also discloses wrongful conduct related to Product B. Here, the company can receive amnesty on Product B and potentially a reduced fine for Product A.
Throughout his presentation, Mr. Hammond repeatedly emphasized that the Corporate Leniency and Amnesty Plus programs should incentivize companies to implement and maintain effective compliance programs and conduct thorough internal investigations to ferret out wrongful conduct. Hammond said investigations conducted by outside counsel, in-house counsel, or corporate compliance officers have been critical to the DOJ’s ability to obtain information and enable companies to avail themselves of these leniency programs. Hammond also said that increased fines are intended to incentivize companies to create and implement effective compliance programs. He noted that in over 50% of the cartel investigations, as the DOJ investigated, it discovered additional, separate wrongdoing. Given these fact, all companies in this industry should establish antitrust compliance programs, train their employees, frequently update their antitrust policies, establish reporting mechanisms to identify potential wrongdoing, and conduct thorough internal investigations. As always, a company’s ability to identify wrongful conduct, make a disclosure to the government, respond to and remediate the problem, fully cooperate with any investigation, and take responsibility for any wrongful conduct, will be paramount to a company’s defense.