iThe President recently signed into law a ten-year extension of the provisions of the Antitrust Criminal Penalty Enhancement and Reform Extension Act (ACPERA) that detreble what would otherwise be treble damage liability for certain cooperating parties in civil antitrust actions. ACPERA provides this potential liability-reducing benefit to individuals and corporations who have qualified for criminal immunity under the leniency program of the Antitrust Division of the United States Department of Justice (“Department”). The House of Representatives had approved the extension by a 366-4 vote, and the Senate followed with a unanimous vote.
The Sherman Antitrust Act of 1890, the centerpiece of federal antitrust law, prohibits a number of anticompetitive practices, and is enforced both criminally and civilly. Criminal enforcement is limited to the most egregious of violations, particularly agreements among competitors to fix prices, rig bids or divide markets. Criminal penalties include substantial fines and jail time, and civil penalties include treble damages assessed jointly and severally against all conspirators. Because these agreements are by nature secret and often difficult to detect, the Department encourages self-reporting by offering the possibility of amnesty from prosecution to the first member of a conspiracy to report its conduct to the Department. The knowledge that any member of a conspiracy might leave at any point and secure such leniency from the Department may threaten the conspiracy's continuing viability, as members feel pressured to reveal the conspiracy and “cut a deal” to secure amnesty before another conspirator does so first.
Prior to ACPERA, the Department’s leniency program allowed conspirators to receive immunity from criminal liability, but this left the cooperating parties liable for treble damages in the civil actions that routinely follow the commencement of criminal actions. That potential treble damage liability could be enormous, and it likely dissuaded some conspirators from self-reporting and seeking leniency.
ACPERA was designed to address this "major disincentive for self-reporting."1 ACPERA bars treble damages and joint liability from cooperating parties who assist plaintiffs in civil actions against the former co-conspirators. As a result, the cooperator only faces single civil damages in the amount of the injury that it caused, while the other conspirators remain jointly liable for treble the damages caused by the entire conspiracy (less only the single damages paid by the cooperator). This ensures that civil plaintiffs can recover judgments for damages in the same amount as they would have prior to ACPERA, while removing a significant barrier to self-reporting. By requiring conspirators to cover the additional damages resulting from the detrebling, ACPERA also increases the pressure on conspirators to win the "race" to reveal their conduct and seek leniency.
In order for a cooperator to enjoy the benefits of ACPERA, it needs to first qualify for the Department’s criminal leniency program. It must also assist the civil plaintiffs, by providing a “full account” of “all facts known to the [cooperator]…that are potentially relevant to the civil action” and by providing all documents that are “potentially relevant” to the civil action that are within its custody or control.2
ACPERA has become an important element in the Department's program to expose and prosecute cartel activity by offering leniency to a cooperator. The Antitrust Division typically conducts over 50 international criminal investigations (as well as many domestic investigations) at any time, and more than half of those investigations rely on information received from an applicant to the leniency program.3
The detrebling provisions of ACPERA were initially enacted in 2004 for a five-year period, and were set to expire in June 2009 until they were extended for a year. The new legislation extends them for an additional ten years, until 2020.
Attorneys at Bracewell & Giuliani LLP have experience representing companies in the investigation and defense of parties accused of violating the antitrust laws and engaging in related criminal conduct.
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1 See “Recent Developments, Trends, and Milestones In The Antitrust Division's Criminal Enforcement Program,” Speech by Deputy Assistant Attorney General Scott D. Hammond, Antitrust Division, U.S. Department of Justice, before the 56th Annual Spring Meeting of the Section of Antitrust Law, American Bar Association, Washington, D.C., March 26, 2008.
2 Pub. L. No. 108–237, § 213, 118 Stat. 666, 667 (2004).
3 Scott D. Hammond, The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades, address before the National Institute on White Collar Crime (Feb. 25, 2010).
