Please enable JavaScript to view this website.

Cartel Leniency Following the Wind of Change

On July 11 of this year, the Assistant Attorney General of the Department of Justice Antitrust Division, Makan Delrahim, announced a new policy to incentivize criminal antitrust compliance.1 Prior to this announcement, the only avenue for culpable antitrust violators to avoid trial or a guilty plea was to be the first company in their cartel to cooperate with law enforcement.2 Now, the door has opened for companies to enter into deferred prosecution agreements when relevant factors, most notably the presence of an effective compliance program, weigh in favor of such an agreement.3

In addition to its civil components, antitrust law criminalizes behavior such as price fixing, bid rigging, and market allocation between competing firms as being per se anticompetitive.4 Companies involved in this conduct are arrayed in trade cartels, and prosecutions of such cartels have resulted in billions of dollars of fines.5

Detecting such cartels has proven difficult as cartel members are incentivized to act in secrecy.6 Without a robust detection apparatus, cartels harming consumers might “never be detected.”7 In order to detect and successfully prosecute antitrust violations, prosecutors rely on cartel participants to cooperate with the government by providing witnesses, documents, and industry expertise that can lead to the successful dismantling of the rest of the cartel.8

Since the early 1990s, the Department of Justice Antitrust Division (the “Division”) has incentivized such cooperation by offering complete leniency to the first company in any given cartel to come forward and provide meaningful cooperation.9 Such leniency protects the company from criminal prosecution and penalties entirely, can include non-prosecution protection for certain cooperating employees, and can secure civil protections such as detrebling of potential damages among other benefits.10 Merely being first is not enough, the leniency applicant must provide cooperation that, in the Division’s view, meaningfully advances the prosecution such that leniency is warranted.11 A leniency applicant that fails to cooperate to the satisfaction of the Division will be subject to prosecution.12 Though if history is a guide, this is a rare occurrence.13)

Companies that are not leniency applicants but nonetheless cooperate with the government stand to receive cooperation credit which can result in a substantial reduction in the fines and penalties they would otherwise be subject to.14 Despite this credit, the Division required all sufficiently culpable companies other than the leniency applicant to actually plead guilty to their anticompetitive conduct.15 This puts criminal antitrust enforcement in contrast with other areas of white collar prosecution where admissions of guilt are often avoided.16 Naturally, companies are loathe to admit to wrongdoing, but this aversion is particularly acute in the antitrust context where civil suits seeking treble damages often follow criminal actions.17

In effect, the leniency program creates a “race” to be the first company in a cartel to cooperate.18 For companies that fail to win the race, the cost of cooperation may not seem worth it. Cooperation with an antitrust investigation can last years and involve millions of documents, hundreds of interviews, expensive economic analysis, the potential suspension of executives or other key employees, and intrusions into core lines of business, all facilitated by expensive expert outside counsel.19 Corporate counsel have questioned whether cooperating as a non-leniency applicant is financially justified, given the millions of dollars typically spent in the process cooperating, and the exposure to civil suits that may still accompany it.20

Relatedly, at the prevention stage, corporate compliance programs are treated differently in the antitrust context than they are in many white collar settings. As longstanding policy, compliance programs are not considered by Division prosecutors when determining how to credit cooperation at the charging and sentencing stages.21 Thus, even a robust compliance program is unable to shield a company from criminal liability or justify a non-prosecution agreement.22 This reflects a rather severe ideology wherein the true measure of a corporate compliance program is the extent to which it actually prevents the occurrence of anticompetitive conduct, without regard for whether the compliance measures taken might otherwise be considered reasonable.23 The proof, to the Division, must be in the pudding.

No matter how robust or well funded a compliance program is, there remains the potential for individual actors to sneak through the system. If such actors each have the potential to bring the tremendous scrutiny of a criminal antitrust probe upon their companies, then resources spent on a compliance program would often be unjustified where they would not make any difference at the charging stage of an investigation.

With concerns of cost and incentivizing compliance in mind, Assistant Attorney General Delrahim publicly announced a change to Division policy on July 11 of this year during remarks at the New York University School of Law Program on Corporate Compliance and Enforcement.24 Centrally, the announcement stated that corporate compliance programs will be considered at both the charging and sentencing stages, effective at the time of the announcement.25

With respect to the charging stage, when Division prosecutors must consider “the adequacy and effectiveness of the company’s compliance program at the time of the offense, as well as at the time of the charging decision.”26 Delarhim went on to say that “the Division’s new approach” will open the door to allowing prosecutors to pursue deferred prosecution agreements, common in other areas of white collar law enforcement.27 As mentioned, such agreements have been largely avoided by the Division, with there being little to no middle ground between leniency applicants and companies forced to plead guilty or face trial. Delrahim did say that the Division will “disfavor non-prosecution agreements” to continue to incentivize the race to cooperate the leniency program created, but it remains to be seen just how large a change in antitrust penalties his announcement will actually cause.28 Due to the protracted length of antitrust investigations, an answer may be years away.

With respect to the sentencing stage, antitrust compliance can help a company in at least three ways.29 First, an “effective” compliance program (to be defined) can result in a three point reduction to its federal corporate defendant’s culpability score.30 Second, such a program may help to determine the fine recommendation within the federal guideline range.31 Importantly, there is the possibility that in extreme circumstances a below guideline recommendation may be appropriate.32 Finally, an effective compliance program will be relevant to the Division’s probation recommendation.33 Disregarding changes to charging policy, the potential for larger reductions in fines and penalties at sentencing are themselves strong incentives to implement effective compliance programs.

Delrahim’s announcement has the potential to affect massive change to the ways in which corporate counsel prevent and respond to criminal antitrust conduct. Securing leniency remains the best possible result for most counsel who uncover cartel conduct, but in cases where corporate compliance is “effective” alternatives to leniency have significantly improved. It stands to reason that this will incentivize more companies not only to improve their compliance programs, but also to avoid trial (though already infrequent) more often given the improvement to a negotiated plea.

To borrow a concept from tort law, if cooperation credit is granted to compliance programs that are not “effective,” then that eliminates the incentive to implement effective compliance programs. If companies can secure cooperation credit with sham, paper compliance programs, then those are the programs they will implement. To avoid this dynamic, Delrahim’s remarks included an elaboration of how the Division will determine whether a compliance program is actually “effective.”34 This analysis is framed around three fundamental questions, taken from the Department of Justice Criminal Division, that ask: “is the program well designed? Is it being applied earnestly and in good faith?” and “does it actually work?”35

With that framework in mind, Delrahim elaborated nine elements of an effective antitrust compliance program:“(1) the design and comprehensiveness of the program; (2) the culture of compliance within the company; (3) responsibility for, and resources dedicated to, antitrust compliance; (4) antitrust risk assessment techniques; (5) compliance training and communication to employees; (6) monitoring and auditing techniques, including continued review, evaluation, and revision of the antitrust compliance program; (7) reporting mechanisms; (8) compliance incentives and discipline; and (9) remediation methods.”36 Given the breadth of these categories, and the variability with which they may apply, Delrahim advised Division prosecutors to focus their analysis by asking three questions. Division prosecutors should first ask “does the company’s compliance program address and prohibit criminal antitrust violations?  Second, did the antitrust compliance program detect and facilitate prompt reporting of the violation?” and  “[t]hird, to what extent was a company’s senior management involved in the violation?”37 With this guidance, the hope is that credit will not be granted to sham compliance programs.

The third question concerning senior management is of particular concern, as the Division still follows guidance from the 2015 Yates memo which emphasizes the importance of prosecuting culpable management.38  Already staunch resistance to investigations of executives could be even further entrenched if such investigations may now also jeopardize a company’s ability to secure credit on account of its compliance program. The Division is still committed to the belief that “[t]he most effective deterrent to corporate criminal misconduct is identifying the people who commit crimes and sending them to prison,” but their desire to achieve that deterrence may face even greater resistance than it currently does.39

Taken together, time will tell if the Division’s new corporate compliance incentives will work as planned, or shift the Division to being less severe in aggregate to corporate defendants.


  1. Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs (July 11, 2019), https://www.justice.gov/opa/speech/file/1182006/download. 

  2. Id. at 2. 

  3. Id. at 8. 

  4. An Antitrust Primer For Federal Law Enforcement Personnel 2 (2018), https://www.justice.gov/atr/page/file/1091651/download. 

  5. Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement, U.S. Dep’t of Justice Antitrust Div., The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades 5 (Feb. 25, 2010), https://www.justice.gov/atr/leniency-program. 

  6. An Antitrust Primer For Federal Law Enforcement Personnel 3 (2018), https://www.justice.gov/atr/page/file/1091651/download; Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement, U.S. Dep’t of Justice Antitrust Div., The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades 2 (Feb. 25, 2010), https://www.justice.gov/atr/leniency-program. 

  7. Richard A. Powers, Acting Deputy Assistant Attorney General for Criminal Enforcement, U.S. Dep’t of Justice Antitrust Div., Remarks at OECD Working Party No. 3: Leniency Roundtable 2 (June 5, 2018), https://www.justice.gov/opa/speech/file/1070976/download. 

  8. Bill Baer, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Prosecuting Antitrust Crimes 2-4 (Sep. 10, 2014), https://www.justice.gov/atr/speech/prosecuting-antitrust-crimes. 

  9. Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement, U.S. Dep’t of Justice Antitrust Div., The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades 2 (Feb. 25, 2010), https://www.justice.gov/atr/leniency-program. 

  10. Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs 9 (July 11, 2019), https://www.justice.gov/opa/speech/file/1182006/download. 

  11. Bill Baer, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Prosecuting Antitrust Crimes 3-4 (Sep. 10, 2014), https://www.justice.gov/atr/speech/prosecuting-antitrust-crimes. 

  12. Id. 

  13. See id. at 4 (feeling a need to clear up “any ambiguity on this point.” 

  14. Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs 2-3 (July 11, 2019), https://www.justice.gov/opa/speech/file/1182006/download. 

  15. Bill Baer, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Prosecuting Antitrust Crimes 5 (Sep. 10, 2014), https://www.justice.gov/atr/speech/prosecuting-antitrust-crimes. 

  16. Accord Renae Marie, Repeat Offenders: Corporate Misdeeds Often Settled with Deferred Prosecution Agreements, Washington Post (Sept. 26, 2019, 11:48 AM), https://www.washingtonpost.com/business/2019/09/26/repeat-offenders-corporate-misdeeds-often-settled-with-deferred-prosecution-agreements/. 

  17. An Antitrust Primer For Federal Law Enforcement Personnel 7 (2018), https://www.justice.gov/atr/page/file/1091651/download. 

  18. Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs 2 (July 11, 2019), https://www.justice.gov/opa/speech/file/1182006/download. 

  19. See Richard A. Powers, Acting Deputy Assistant Attorney General for Criminal Enforcement, U.S. Dep’t of Justice Antitrust Div., Remarks at OECD Working Party No. 3: Leniency Roundtable 2 (June 5, 2018), https://www.justice.gov/opa/speech/file/1070976/download. 

  20. Id. at 4. 

  21. Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs 6 (July 11, 2019), https://www.justice.gov/opa/speech/file/1182006/download (citation omitted). 

  22. Bill Baer, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Prosecuting Antitrust Crimes 7 (Sep. 10, 2014), https://www.justice.gov/atr/speech/prosecuting-antitrust-crimes. 

  23. Bill Baer, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Prosecuting Antitrust Crimes 6-8 (Sep. 10, 2014), https://www.justice.gov/atr/speech/prosecuting-antitrust-crimes. 

  24. Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs 3 (July 11, 2019), https://www.justice.gov/opa/speech/file/1182006/download. 

  25. Id. at 12. 

  26. Id. at 5. 

  27. Id. at 8. 

  28. Id. 

  29. Id. at 9. 

  30. Id. 

  31. Id. at 10. 

  32. Id. 

  33. Id. 

  34. Id. at 12. 

  35. Id. at 7. 

  36. Id. at 13. 

  37. Id. at 13. 

  38. Memorandum from Sally Quillian Yates, Deputy Att’y General, U.S. Dep’t of Justice to All U.S. Att’ys et al., Individual Accountability for Corporate Wrongdoing (Sept. 9, 2015), https://www.justice.gov/archives/dag/file/769036/download. 

  39. Makan Delrahim, Assistant Attorney General, U.S. Dep’t of Justice Antitrust Div., Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs 4 (July 11, 2019), https://www.justice.gov/opa/speech/file/1182006/download (citation omitted). 

The following two tabs change content below.

Will Harris

Latest posts by Will Harris (see all)