Limits on Antitrust Damage Exposure for Cooperating Cartelists Extended

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Provisions in the Antitrust Criminal Penalties Enforcement and Reform Act (ACPERA) of 2004 that limit the civil liability in private antitrust actions of cartel participants who are accepted into the Department of Justice Antitrust Division's leniency program have been extended for ten years.

Legislation extending the provisions through June 22, 2020, was signed into law on June 9. The text of ACPERA, as amended by Public Law 111-190, begins at CCH Trade Regulation Reporter ¶27,750.

Under the Antitrust Division’s corporate leniency program, a company is protected from criminal prosecution for antitrust violations if it is first to come forward to advise the Antitrust Division of an antitrust offense and cooperates with the government’s investigation.

The ACPERA provides the added incentive of reducing liability in private damages suits to actual damages rather than treble damages. Under the law, the cooperating company must also cooperate in the private litigation in order for the de-trebling provision to apply.

For futher details about the legislation, see Trade Regulation Talk, May 28, 2010 posting.

Congress Passes Extension of Limits on Antitrust Damages for Leniency Program Participants

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Legislation to extend for ten years the Antitrust Criminal Penalties Enforcement and Reform Act (ACPERA) of 2004 was approved by Congress yesterday. ACPERA limits the civil liability of cartel participants who are accepted into the Department of Justice Antitrust Division's leniency program.

Under ACPERA, leniency program participants are liable in private antitrust lawsuits for the actual damages caused by the company, rather than the treble damages usually available.

As a result, a significant disincentive to participating in the leniency program—the prospect of treble damages in a civil suit despite immunity from criminal prosecution--is removed. The law was amended in 2009 to extend the detrebling provision for one year, until June 22, 2010.

The current legislation (H.R. 5330), if signed by the president, will extend the de-trebling provision until 2020. A Senate version of the bill (S. 3259) would have provided for a permanent extension of ACPERA.

Senator Kohl’s Views

"This 10-year extension will offer the Department of Justice Antitrust Division the resources and authority necessary to protect consumers from price-fixing cartels," said Senator Herb Kohl (Wisconsin) in a May 28 statement.

"The program has proven successful in uncovering and punishing price-fixing crimes, and it is my hope that this extension will usher in another decade of detection and prosecution."

Comptroller General Study

The legislation also calls on the Comptroller General to submit a report to Congress on the effectiveness of the ACPERA, both in criminal investigation and enforcement and in private civil actions. The report is to consider the addition of qui tam proceedings to the antitrust leniency program and the creation of anti-retaliatory protection for employees who report illegal anticompetitive conduct.

Limits on Treble Damages for Antitrust Amnesty Applicants Extended for One Year

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA) has been amended to extend for one year provisions that protect successful amnesty applicants under the Department of Justice Antitrust Division corporate leniency program from treble damages in private suits.

The “Antitrust Criminal Penalty Enhancement and Reform Act of 2004 Extension Act” (Public Law 111-30) was signed into law on June 19, 2009. Enactment came just two days after the measure received Senate approval and ten days after it passed the House of Representatives. The legislation was introduced on June 3.

Portions of ACPERA had been scheduled to sunset on June 22, 2009. According to the original law, limitations on recovery against an amnesty applicant cease to have effect five years after the law's June 22, 2004, date of enactment. The extension ensures that antitrust amnesty agreements entered into until June 22, 2010, will shield successful applicants from treble damages.
Senator Herb Kohl (D-Wis.), chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, called the limitations on civil liability “an important part of the Division’s Leniency Policy.”

The limitations “removed a significant disincentive to participation in the leniency program--the concern that, despite immunity from criminal charges, a participating corporation might still be on the hook for treble damages in any future antitrust lawsuits.”

Remarking that “the incentives in this program are critical to the success of the Antitrust Division's criminal antitrust enforcement,” Sen. Patrick Leahy (D-Vt.) said that “the one-year extension will allow the Department of Justice to continue this successful program while Congress assesses the long-term direction of the Department of Justice's leniency program.” Sen. Leahy chairs the Senate Judiciary Committee.

Further information about the legislation appears here at the Library of Congress Thomas website.

Bill to Extend ACPERA’s Detrebling Provisions Passes House

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter, and John W. Arden.

Legislation to delay the sunsetting of provisions of the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA) passed the U.S. House of Representatives on June 9.

The proposed legislation—“Antitrust Criminal Penalty Enhancement and Reform Act of 2004 Extension Act” (H.R. 2675)—would extend for one year provisions of ACPERA that protect successful amnesty applicants under the Department of Justice Antitrust Division corporate leniency program from treble damages in private suits.

Portions of ACPERA are currently scheduled to sunset on June 22, 2009. According to the law, limitations on recovery against an amnesty applicant cease to have effect five years after the law’s June 22, 2004 date of enactment. Unless the extension is enacted, antitrust amnesty agreements entered into after the expiration date would not shield successful applicants from treble damages.

H.R. 2657 was introduced on June 3 by Representative Hank Johnson (D-Georgia) and referred to the Judiciary Committee, which took no action. On June 9, Johnson moved to suspend the rules and pass the bill. The motion was agreed to on a voice vote, and the bill was received in the Senate today.

In making his motion, Johnson argued that ACPERA promotes “the detection and prosecution of illegal cartel behavior by giving participants in a price-fixing cartel powerful incentives to report the cartel to the Justice Department and cooperate in the prosecution of the cartel.”

Before ACPERA, the Justice Department could offer leniency to the co-conspirator that helps prosecute a cartel, but the co-conspirator would remain fully liable for treble damages in private litigation.

“In the first half of this year, ACPERA has aided the Antitrust Division in securing jail sentences in 85 percent of its individual prosecutions and over $900 million in criminal fines,” Johnson stated.

Earlier, extension of ACPERA’s sunsetting provisions was advocated by the Antitrust Section of the American Bar Association.

In a May 8 letter, the Antitrust Section called on leaders in the House and Senate Judiciary Committees to extend these provisions for five years. Antitrust Section Chair James A. Wilson further suggested that Congress use the five-year extension to evaluate the efficacy of the detrebling provisions.

“While the Section is inclined to believe that the detrebling provision has made an important contribution to the overall effectiveness of the government’s leniency program, with no discernable ill effect on the deterrent and remedial objectives of enforcement,” Wilson wrote, “it also recognizes that legitimate questions have been raised by those who hold a differing view and we note that there has been insufficient time under the ACPERA regime to permit a full evaluation of the benefits and costs of the provision.”

Text of the letter appears here on the ABA website.

Amnesty Applicant Not Ordered to Identify Itself, Assist in Private Antitrust Suit

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in San Francisco will not require a company that was granted conditional leniency under the Department of Justice Antitrust Division corporate leniency program to identify itself to, and cooperate with, plaintiffs in a private antitrust action, alleging a conspiracy to fix prices in the thin film transistor-liquid crystal display (TFT-LCD) industry.

The plaintiffs—direct purchasers of TFTLCD panels—sought a motion to compel the amnesty applicant to comply with the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA) or forfeit any rights under the Act.

The ACPERA (CCH Trade Regulation Reporter ¶27,750) limits the liability in a private antitrust action of a successful amnesty applicant that has cooperated with the government’s investigation and prosecution of the underlying conspiracy. The amnesty applicant’s liability might be limited to actual damages, instead of the usual treble damages.

Grant of Conditional Leniency

The Justice Department confirmed that it granted conditional leniency to an applicant, and that the applicant satisfied its obligations under the leniency agreement to fully cooperate with the government in its investigation into the TFT-LCD price fixing conspiracy.

Several corporations and individuals were successfully prosecuted for their roles in the conspiracy. The Justice Department, however, argued that the ACPERA did not authorize the court to grant the plaintiffs’ requested relief.

The court sided with the Justice Department and Samsung, the company identified by the plaintiffs as the amnesty applicant. While the court agreed that an amnesty applicant’s cooperation was most valuable early in the litigation, it concluded that the language of ACPERA suggested that the court’s assessment of an amnesty applicant’s cooperation occurred at the time of imposing judgment or otherwise determining liability and damages. Therefore, the amnesty applicant’s conduct would not be considered until the amnesty applicant sought to limit liability under ACPERA later in the suit.

Sunsetting of Provisions

The decision is probably the first to consider a federal district court’s authority under the ACPERA to compel an amnesty applicant to cooperate with private antitrust plaintiffs. It comes as the provisions in the 2004 law that provide amnesty applicants with an opportunity to avoid treble damages are about to sunset. According to the law, the provisions cease to have effect 5 years after the date of enactment. The law was enacted on June 22, 2004.

The American Bar Association Section of Antitrust Law has called on leaders in the House and Senate Judiciary Committees to extend these provisions. It has also suggested that Congress evaluate the efficacy of the detrebling provisions.

The May 19 decision is In re TFT-LCD (Flat Panel) Antitrust Litigation, 2009-1 Trade Cases ¶76,626.