Deterrence and Detection: Antitrust Division Reaffirms Commitment to Cartel Enforcement, Employing Corporate Compliance Policy and Strike Force
By Lindsey Vaala, Morgan Kelley and Laura Muse*
In a speech at the American Bar Association Antitrust Law Section’s International Cartel Conference in San Francisco last week, Deputy Assistant Attorney General Richard A. Powers reaffirmed the Antitrust Division’s commitment to its mission of deterring, detecting, and prosecuting criminal antitrust conduct.1 Powers emphasized the Division’s “firm commitment” to the Leniency Program — its “most important tool” — and the importance of predictability, transparency, and trust in the leniency process.2 The crux of his speech, however, highlighted two initiatives rolled out last year to supplement the Leniency Program: (1) the Division’s new policy making mitigation credit available to companies that had in place at the time of a criminal antitrust violation a robust corporate compliance program, and (2) the recently announced Procurement Collusion Strike Force targeting antitrust crimes in government contracting. Although the number of public criminal antitrust enforcement actions has declined recently, Powers’ remarks underscore that cartel enforcement remains a key priority.
Effectuating Deterrence with Credit for Compliance
Last summer, the DOJ Antitrust Division announced it would begin offering mitigation credit at the charging phase for companies with robust and effective compliance programs, marking a monumental shift from its prior leniency-only policy.3 As we’ve previously discussed, before this shift, the only way for a company to avoid prosecution for antitrust violations was to win the leniency race by being the first company to self-report its misconduct to DOJ.4 Under the new policy, a company that self-reports misconduct, but that is not first in the door at DOJ, may be eligible to obtain a deferred prosecution agreement (“DPA”) if its compliance program resulted in the detection and remediation of the violation and the company subsequently cooperates with the Division’s investigation.5
Some have expressed concerns that the Division’s new corporate compliance policy may undermine the Leniency Program by disincentivizing companies to immediately self-report misconduct once it’s discovered.6 Because companies may still be eligible for a DPA even if they are not the first to report to DOJ, would-be leniency applicants might now hold off on reporting potential violations, and instead “sit tight” and later advocate for a DPA if they do not receive leniency.7
In his speech, Powers directly addressed these concerns, stating that they are “premised on a fundamental misunderstanding of what it takes to qualify for a DPA.”8 He stressed that the adequacy and effectiveness of a company’s compliance program is only one of ten factors that prosecutors must consider when considering appropriate mitigation.9 Other factors, including prompt self-reporting, cooperation, and remedial action, should deter companies from relying on a “wait-and-see approach,” which he said “could prove to be a costly mistake.”10
Powers also reiterated that although corporate compliance programs are the “first line of defense” in preventing antitrust crimes — and thus play a key role in deterring cartel conduct — the corporate compliance policy is meant to complement the Leniency Program, not replace it.11 Given the “meaningful difference” between leniency and a DPA, the former remains an important, attractive option for companies.12 Notably, a leniency applicant receives complete immunity from criminal prosecution (including for culpable employees who cooperate with the government’s investigation) as well as civil benefits available under the Antitrust Criminal Penalty Enhancement & Reform Act (ACPERA), including detrebling of civil damages and the elimination of joint and several liability. A DPA, on the other hand, may not include protection for culpable employees, does not carry ACPERA benefits, and is difficult to earn.13 (For example, the Division has made clear that the involvement of senior executives in the misconduct will most likely disqualify any company from DPA eligibility.) The Division will rigorously assess the extent to which the company has meaningfully and thoughtfully invested in its compliance efforts. Powers reported that the Division has seen no decline in leniency marker requests since the new corporate compliance policy was announced.14
Improving Detection with Interagency Strike Force
Powers’ speech also highlighted the importance of DOJ’s recently launched Procurement Collusion Strike Force. The Strike Force, announced in November 2019, is an interagency partnership among the Antitrust Division, 13 U.S. Attorney’s Offices, the Federal Bureau of Investigation, and four federal Offices of Inspector General, with the mission of rooting out bid rigging, price fixing, and market allocation in public procurement and government contracting.15 As we previously wrote, collusion in public procurement is particularly problematic in light of the large amount of public money at stake — in 2018, the U.S. government spent more than $550 billion on procurements by federal agencies alone, and another $79 billion to support public works and infrastructure projects at the state and local levels.16 Noting these numbers in his speech, Powers emphasized that the sheer volume of federal dollars spent on procurement necessitates this area be a top enforcement priority.17
The Strike Force aims to better “deter, detect, and prosecute cartels in the public procurement space,” and one of its main goals is to raise awareness about the illegality of bid rigging and the existence of active enforcement against business of all sizes that collude in government contracting.18 While Powers stressed that initiatives like the Strike Force are not meant to “supplant” the Leniency Program, he noted that public procurement is part of several “critical aspects of the economy,” which call for “different approaches” if the Division is to accomplish its mission.19 In particular, the Strike Force’s decentralized, district-specific structure empowers the interagency partnership to tailor its outreach and investigative resources in a highly effective manner.20 Since its inception, more than thirty federal, state, and local government agencies have contacted the Strike Force for help with outreach training, or proposing to partner with the Strike Force on new investigations.21 Powers also revealed that the Strike Force is behind multiple grand jury investigations opened recently by the Division.22 While no investigations have yet been made public, the Division is actively investigating this industry.
Why This Matters for You
Powers’ speech makes clear that the Division continues to actively enforce the criminal antitrust laws and is implementing new ways to detect and deter misconduct. Companies should therefore consider how to mitigate their antitrust risk. By investing in and implementing strong corporate compliance programs, a company can actively manage that risk by positioning itself to potentially qualify for leniency, or a DPA or other mitigation credit, if a violation does occur. The recent launch of the Procurement Collusion Strike Force and the Division’s ongoing commitment to criminally prosecute antitrust misconduct in the employment space (a topic on which we have written frequently)23 serve as two examples of how the Division is thinking creatively to broaden its criminal antitrust enforcement efforts.
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*Laura Muse is a law clerk working out of our Washington office.
1 See U.S. Dep’t of Justice, Deputy Assistant Attorney General Richard A. Powers Delivers Remarks at the 13th International Cartel Workshop (Feb. 19, 2020), https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-richard-powers-delivers-remarks-13th-international (hereinafter Powers’ Remarks).
2 See id.
3 See U.S. Dep’t of Justice, Assistant Attorney General Makan Delrahim Delivers Remarks at the New York University School of Law Program on Corporate Compliance and Enforcement (July 11, 2019), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-new-york-university-school-l-0.
4 Craig P. Seebald, Lindsey R. Vaala, and Morgan A. Kelley, Winning the Leniency Race No Longer the Only Avenue for Avoiding Criminal Antitrust Prosecution, Vinson & Elkins (July 15, 2019), https://www.velaw.com/insights/winning-the-leniency-race-no-longer-the-only-avenue-for-avoiding-criminal-antitrust-prosecution/; Morgan A. Kelley and Lindsey R. Vaala, More Bang for the Antitrust Compliance Buck: Antitrust Division to Consider Preexisting Compliance Programs at the Charging Stage, Vinson & Elkins (May 22, 2019), https://www.velaw.com/insights/more-bang-for-the-antitrust-compliance-buck-antitrust-division-to-consider-preexisting-compliance-programs-at-the-charging-stage/.
5 Seebald et al., supra note 4.
6 See, e.g., Kristin Broughton & Dylan Tokar, Antitrust Compliance Policy Revamps All-or-Nothing Approach to Corporate Leniency, Wall St. J. (July 12, 2019), https://www.wsj.com/articles/antitrust-compliance-policy-revamps-all-or-nothing-approach-to-corporate-leniency-11562971766.
7 Powers’ Remarks.
9 See id.
11 See id.
14 See id.
15 U.S. Dep’t of Justice, Assistant Attorney General Makan Delrahim Delivers Remarks at the Procurement Collusion Strike Force Press Conference, (Nov. 5, 2019), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-procurement-collusion-strike/; see also Powers’ Remarks.
16 Lindsey R. Vaala and John M. Satira, Government Contractors in the Cross-Hairs: Antitrust Division Unveils New Procurement Collusion Strike Force, Vinson & Elkins (Nov. 7, 2019), https://www.velaw.com/insights/government-contractors-in-the-cross-hairs-antitrust-division-unveils-new-procurement-collusion-strike-force/.
17 See Powers’ Remarks.
18 See id.
19 See id.
20 See U.S. Dep’t of Justice, Deputy Assistant Attorney General Richard A. Powers Delivers Remarks on the State of Criminal Antitrust Enforcement in 2020 (Feb. 7, 2020), https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-richard-powers-delivers-remarks-state-criminal.
22 See Powers’ Remarks.
23 See Lindsey R. Vaala and Morgan A. Kelley, DOJ Antitrust Division Intervenes in Private No-Poach Class Action to Obtain Right to Enforce Settlement Agreement, The V&E Report (Nov. 20, 2019), https://www.velaw.com/insights/doj-antitrust-division-intervenes-in-private-no-poach-class-action-to-obtain-right-to-enforce-settlement-agreement/; Lindsey R. Vaala and David C. Smith, No-Poachers Beware: the DOJ and Class Action Plaintiffs Turn Attention to No-Hire Agreements, Vinson & Elkins (Summer 2018), https://www.velaw.com/insights/no-poachers-beware-the-doj-and-class-action-plaintiffs-turn-attention-to-no-hire-agreements/; Thomas H. Wilson and Lindsey R. Vaala, DOJ Settles Enforcement Action Targeting “No Poach” Agreements, Vinson & Elkins (May 15, 2018), https://www.velaw.com/insights/doj-settles-enforcement-action-targeting-no-poach-agreements/; Lindsey R. Vaala and David C. Smith, DOJ Follows Through on Threat to Challenge “No Poach” Agreements, Vinson & Elkins (Apr. 16, 2018), https://www.velaw.com/insights/doj-follows-through-on-threat-to-challenge-no-poach-agreements/; Hill Wellford and Lindsey R. Vaala, DOJ “No Poach” Antitrust Prosecutions May Be Imminent, Vinson & Elkins (Feb. 16, 2018), https://www.velaw.com/insights/doj-no-poach-antitrust-prosecutions-may-be-imminent/.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.