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Whither amnesty? Uncertainty in U.S. antitrust enforcement

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David Esseks

Partner

New York

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Fishman Todd
Todd Fishman

Partner

New York

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28 June 2013

Since its formalization in 1993, the corporate leniency policy of the U.S. Department of Justice's Antitrust Division has achieved remarkable results. Companies that discovered anti-competitive behavior in their ranks rushed to report their wrongdoing to the Antitrust Division, hoping to be first in the door and thereby receive near-certain amnesty for the company and all cooperating employees. There was reason to hurry. The twin hallmarks of the policy—transparency and predictability—provided assurance that those who lost the race for leniency were almost always subject to criminal penalties.

But a strange thing happened on the way to record corporate fines and hefty jail sentences for individual violators: the wave of recent enforcement actions against LIBOR-submitting banks brought with it a destabilizing undertow of new realities, and the clear all-or-nothing incentives gave way to complexity. A successful leniency applicant may still be exposed to significant criminal penalties from other law enforcement or regulatory agencies, diluting the obvious benefits of being first-in while increasing the potential risks. At the same time, a cooperating late-comer, which ordinarily would not qualify for leniency, may still be able to avoid criminal penalties. Thus, for companies weighing whether or not to report possible U.S. antitrust violations, these cases and other developments have replaced clear incentives for being first in the door with newfound uncertainty. While these trends thus far have been confined to antitrust enforcement in the banking and financial services industry, the animating factors suggest the possibility of similar outcomes in other highly regulated and concentrated sectors.
 
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