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\par 
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\par }\pard \ql \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0 {\b\fs36\insrsid12084293 \tab EFFECTIVE LENIENCY PROGRAM
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\par }{\b\fs30\insrsid12084293 By
\par 
\par 
\par Scott D. Hammond
\par Director of Criminal Enforcement
\par Antitrust Division
\par U.S. Department of Justice
\par 
\par 
\par Presented before the
\par 
\par ACCC 
\par Cracking Cartels: International and Australian Developments
\par 
\par 
\par 
\par Sydney, Australia
\par November 24, 2004
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\par \tab }{\b\fs28\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 EF\hich\af0\dbch\af0\loch\f29 FECTIVE LENIENCY PROGRAM}{\loch\af29\insrsid12084293 
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\par }\pard \ql \li0\ri0\widctlpar\tqc\tx4680\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \tab }{\b\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 I.  }{\b\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Introduction}{
\loch\af29\insrsid12084293 
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\par }\pard \ql \fi720\li0\ri0\widctlpar\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
It is truly an honor to be here at the ACCC's Cracking Cartels Conference.  It is fitting that we have just devoted a full two-day workshop solely to the topic of leniency, because the advent of leniency program\hich\af0\dbch\af0\loch\f29 
s has completely transformed the way competition authorities around the world detect, investigate, and deter cartels.  An effective leniency program will lead cartel members to confess their conduct to authorities even before an investigation is opened.  
\hich\af0\dbch\af0\loch\f29 I\hich\af0\dbch\af0\loch\f29 
n other cases, it will induce organizations already under investigation to abandon the cartel stonewall, race to the government, and provide evidence against the other cartel members.  Leniency programs have led to the detection and dismantling of the lar
\hich\af0\dbch\af0\loch\f29 g\hich\af0\dbch\af0\loch\f29 
est global cartels ever prosecuted and resulted in record-breaking fines in the United States, Canada, the EU and other jurisdictions.  In the United States alone, companies have been fined over $2.5 billion dollars for antitrust crimes since 1997, with o
\hich\af0\dbch\af0\loch\f29 v\hich\af0\dbch\af0\loch\f29 
er 90 percent of this total tied to investigations assisted by leniency applicants.  And there is more to come.  Currently, the Division is investigating over 50 suspected international cartels operating on six continents.  More than half of these investi
\hich\af0\dbch\af0\loch\f29 g\hich\af0\dbch\af0\loch\f29 ations were initiated or are being advanced by information received from a leniency applicant.  
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \hich\af0\dbch\af0\loch\f29 The recent two-day ICN Cartels Workshop covered a wide array of investigative practices used for cracking cartels.  While these techniques are not available i\hich\af0\dbch\af0\loch\f29 
n every jurisdiction, Antitrust Division prosecutors are fortunate to have a full arsenal of tools at their disposal.  Our investigations are assisted by highly trained FBI agents skilled in interview and interrogation techniques.  Individuals face possib
\hich\af0\dbch\af0\loch\f29 l\hich\af0\dbch\af0\loch\f29 e jail sentences for violating U.S. antitrust laws and are therefore often motivated to confess and cooperate in our investigations in exchange for reduced penalties.  With the cooperation of }{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 insiders,}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 we are able to secretly record incriminating calls o\hich\af0\dbch\af0\loch\f29 
r meetings among cartel members.  Other available investigative powers include the power to compel individuals to provide sworn oral testimony, the assistance of INTERPOL and national immigration authorities to track, question, detain, and possibly extrad
\hich\af0\dbch\af0\loch\f29 i\hich\af0\dbch\af0\loch\f29 
te cartel members, and the execution of search warrants on corporate offices as well as the homes of cartel members.  While all of these tools are valuable and frequently utilized in our investigations, the fact is that the U.S. Corporate Leniency Program
\hich\af0\dbch\af0\loch\f29  \hich\af0\dbch\af0\loch\f29 
has directly led to the detection and successful prosecution of more international cartels than all of these other powers combined.  Unquestionably, leniency programs are the greatest investigative tool ever designed to fight cartels.  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
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\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  While some inves\hich\af0\dbch\af0\loch\f29 
tigative techniques, such as taping cartel meetings or searching private homes, are not available in every jurisdiction, leniency programs can }{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 potentially}{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29  be utilized in any jurisdiction regardless of whether cartel activity is treated as a criminal, civil\hich\af0\dbch\af0\loch\f29 
 or administrative offense.   I say potentially available, because a jurisdiction must meet a number of criteria before it can institute a leniency program that works.  Creating a program on paper is the easy part.  However, implementing an }{
\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 effective }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 lenie\hich\af0\dbch\af0\loch\f29 ncy program }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \endash }{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  one that the business community and the private bar have confidence in and will rush to take advantage of }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \endash }{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  is much harder.  
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Creating an effective leniency program is what I will talk about, and it was really, in essence, the theme of the e\hich\af0\dbch\af0\loch\f29 
ntire ICN Leniency Workshop which just took place.  How do you build a leniency program that will cause a company to come forward and voluntarily report its participation in a cartel that has gone previously undetected?  What inducements and concessions m
\hich\af0\dbch\af0\loch\f29 u\hich\af0\dbch\af0\loch\f29 
st a competition authority be willing to make to overcome the perceived risks and costs to the company of reporting the violation?  How do you create an enforcement regime that causes management to conclude after it discovers a violation that it has but o
\hich\af0\dbch\af0\loch\f29 n\hich\af0\dbch\af0\loch\f29 e viable option }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 the company must self-report and cooperate or face certain and severe penalties?  
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During the ICN Leniency Workshop we tried to answer these questions by sharing our experiences with not only what works but, perhaps more importantly, wh\hich\af0\dbch\af0\loch\f29 
at has not and what will not work.  For example, government speakers from the United States, Canada, and the EU }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 the three jurisdictions with the most experience and most success with leniency programs }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 have experience with earlier versions of leniency p\hich\af0\dbch\af0\loch\f29 
rograms that were fundamentally flawed and were not successful.  These programs lacked transparency, were unpredictable, and failed to provide the necessary incentives and induce self-reporting and cooperation.  For example, the original version of the U.
\hich\af0\dbch\af0\loch\f29 S\hich\af0\dbch\af0\loch\f29 
. Corporate Leniency Program dates back to 1978.  Until the current program was revised in 1993, we received only one leniency application per year, and the original program did not lead to the detection of a single international cartel }{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  not one.  We lear\hich\af0\dbch\af0\loch\f29 ned some lessons the hard way and revised the program in 1993.}{
\cs15\super\loch\af29\insrsid12084293 \chftn {\footnote \pard\plain \ql \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\cs15\super\insrsid12084293 \chftn }{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29  Under the 197\hich\af0\dbch\af0\loch\f29 8 program, violators who came forward and reported their illegal activity before an investigation was underway were }{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 eligible}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  to receive a complete pass from criminal prosecution.  The grant of amnesty, however, was not automatic and the Division retained s\hich\af0\dbch\af0\loch\f29 
ubstantial prosecutorial discretion in the decision-making process.  In 1993, the Division dramatically expanded its Amnesty Program to increase the opportunities and raise the incentives for companies to report criminal activity and cooperate with the Di
\hich\af0\dbch\af0\loch\f29 v\hich\af0\dbch\af0\loch\f29 ision.  The Amnesty Program was revised in three major respects.  First, the policy was changed to ensure that amnesty is }{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 automatic}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  if there is no pre-existing investigation.  That is, if a corporation comes forward prior to an investigation and meets the \hich\af0\dbch\af0\loch\f29 program}{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s requirements, the grant of amnesty is certain and is not subject to the exercise of prosecutorial discretion.  Second, the Division created an alternative amnesty, whereby amnesty is available even if cooperation begins }{\i\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 after}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  an investigation is \hich\af0\dbch\af0\loch\f29 
underway.  Third, if a corporation qualifies for automatic amnesty, then all directors, officers, and employees who come forward with the corporation and agree to cooperate also receive automatic amnesty.  For a fuller discussion of these changes and the 
\hich\af0\dbch\af0\loch\f29 a\hich\af0\dbch\af0\loch\f29 pplication of the Division}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s Corporate Leniency Policy}{\f21\insrsid12084293 
 see Antitrust Division, U.S. Department of Justice Corporate Leniency Policy (1993), }{\i\f21\insrsid12084293 available at}{\f21\insrsid12084293  }{\f21\ul\cf2\insrsid12084293 http://www.usdoj.gov/atr/public/guidelines/0091.htm}{\f21\cf1\insrsid12084293 
; \'93The Corporate Leniency Policy: Answers To Recurring Questions,\'94 speech by Gary R. Spratling, Deputy Assistant Attorney General, Antitrust Division, before ABA Antitrust Section 1998 Spring Meeting (April 1, 1998), }{\i\f21\cf1\insrsid12084293 
available at }{\f21\ul\cf2\insrsid12084293 http://www.usdoj.gov/atr/public/speeches/1626.htm}{\f21\cf1\insrsid12084293 ; \'93Making Companies An Offer They Shouldn\rquote t Refuse,\'94
 speech by Gary R. Spratling, before Bar Association of the District of Columbia\rquote s 35}{\f21\cf1\super\insrsid12084293 th}{\f21\cf1\insrsid12084293  Annual Symposium on Associations and Antitrust (February 16, 1999), }{\i\f21\cf1\insrsid12084293 
available}{\f21\cf1\insrsid12084293  }{\i\f21\cf1\insrsid12084293 at }{\f21\cf1\insrsid12084293 http://www.usdoj.gov/atr/public/speeches/2247.htm; \'93Detecting And Deterring Cartel Activity Through An Effective Leniency Program,\'94
 speech by Scott D. Hammond, before International Workshop on Cartels (November 21-22, 2000),}{\i\f21\cf1\insrsid12084293  available at }{\f21\cf1\insrsid12084293  http://www.usdoj.gov/atr/public/speeches/9928.htm; \'93When Calculating the Costs an
d Benefits of Applying for Corporate Amnesty, How Do You Put a Price Tag on an Individual\rquote s Freedom?,\'94 speech by Scott D. Hammond, Fifteenth Annual National Institute On White Collar Crime (March 8, 2001), }{\i\f21\cf1\insrsid12084293 
available at}{\f21\cf1\insrsid12084293  }{\f21\ul\cf2\insrsid12084293 http://www.usdoj.gov/atr/public/speeches/7647.htm}{\f21\cf1\insrsid12084293 .  }}}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
  We made it more transparent and increased the opportunities and raised the incentives for companies to report criminal activity and cooperate with the Division.  Since then, there has been a \hich\af0\dbch\af0\loch\f29 
nearly twenty-fold increase in the application rate, and it has resulted in the cracking of dozens of large international cartels. 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
Equally important is the experience that the Non-Governmental Advisors (NGAs) bring to conferences such as those taking pla\hich\af0\dbch\af0\loch\f29 
ce here in Sydney.  They provide valuable insight on what matters most in the board rooms where the decisions on whether to report are weighed.  They know first-hand what it takes to induce a company to turn itself in.  They also appreciate what disincent
\hich\af0\dbch\af0\loch\f29 i\hich\af0\dbch\af0\loch\f29 
ves in a program will cause a company not to report a violation and choose instead to gamble that enforcers will never be able to build a case against it.  The NGA speakers have observed both outcomes, so they know what is required to convince a company t
\hich\af0\dbch\af0\loch\f29 o\hich\af0\dbch\af0\loch\f29  put its trust (and potentially the future of the company and its employees) in the hands of the authorities who are administering a leniency program.  
\par 
\par \sect }\sectd \sbknone\linex0\headery1440\footery576\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 My presentation this morning will focus on three prerequisites for adopting and implementing an effec\hich\af0\dbch\af0\loch\f29 
tive leniency program.  These prerequisites are essential cornerstones that must be in place before a jurisdiction can successfully implement a leniency program.   First, the jurisdiction}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s antitrust laws must provide the threat of severe sanctions for tho\hich\af0\dbch\af0\loch\f29 
se who participate in hardcore cartel activity and fail to self-report.  Second, organizations must perceive a high risk of detection by antitrust authorities if they do not self-report.  Third, there must be transparency and predictability to the greates
\hich\af0\dbch\af0\loch\f29 t\hich\af0\dbch\af0\loch\f29  extent possible throughout a jurisdiction}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s cartel enforcement program, so that companies can predict with a high degree of certainty how they will be treated if they seek leniency and what the consequences will be if they do not.  These three major corne\hich\af0\dbch\af0\loch\f29 rstones }{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  severe sanctions, heightened fear of detection, and transparency in enforcement policies }{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  are the indispensable components of every effective leniency program.
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
However, before addressing these prerequisites, it is important that I be clear on s\hich\af0\dbch\af0\loch\f29 
ome terminology.  In the United States, the terms corporate immunity, corporate leniency, and corporate amnesty are all synonymous.  Under the U.S. Corporate Leniency Program, these terms all refer to a complete pass from criminal prosecution or total imm
\hich\af0\dbch\af0\loch\f29 u\hich\af0\dbch\af0\loch\f29 
nity for a company and its cooperating employees.  The company pays no fine.  Their culpable executives do not go to jail.  The key is that only one company can qualify for leniency.  A company that is second in the door }{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29   even if by only a matter of days\hich\af0\dbch\af0\loch\f29  or hours, as has been the case on a number of occasions }{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 will not be eligible for leniency.  Companies that come forward after the leniency applicant and offer to cooperate may enter into plea agreements and have their fines reduced, but this process fal\hich\af0\dbch\af0\loch\f29 
ls outside of our leniency program.  When I use the term }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 leniency}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  or }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 amnesty,}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  I am referring to a company that is the first to report anticompetitive activity and that is seeking a pass from prosecution and a 100% reduction in fines.   
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 A number of ot\hich\af0\dbch\af0\loch\f29 
her leniency programs, including, notably, the EU}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s, operate a little differently.}{\cs15\super\loch\af29\insrsid12084293 \chftn 
{\footnote \pard\plain \ql \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\cs15\super\insrsid12084293 \chftn }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
See Commission Notice on Immunity from Fines and Reduction of Fines in Cartel Cases, 2002 O.J. (C}{\loch\af29\insrsid12084293 \~}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 45) 3.    }}}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
  So it is possible to confuse the terminology.  Like the U.S. policy, the EU}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s program offers the promise of a 100 percent reduction or full immunity from fines for a compa\hich\af0\dbch\af0\loch\f29 ny that self-reports.  However, the EU}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 s Notice also applies to companies that do not win the race for full immunity, but still cooperate with an investigation and earn merely a reduction in fines.  It is my understanding that, informally, when the EU uses
\hich\af0\dbch\af0\loch\f29  the term }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 immunity}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29  it refers to full immunity (or 100 percent reduction in fines), and a reference to }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 leniency}{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 includes cases where a company is not awarded full immunity, but earns a reduction in fine (50 percent or less reduction in fines).  When I u\hich\af0\dbch\af0\loch\f29 se the terms }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 amnesty}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  or }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 leniency}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  in my presentation, however , I will be referring to full immunity. 

\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi-720\li720\ri0\widctlpar\tqc\tx4680\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin720\itap0 {\b\loch\af29\insrsid12084293 \tab \hich\af0\dbch\af0\loch\f29 II.  }{\b\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
The Threat Of Severe Sanctions}{\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \sbknone\linex0\headery1440\footery576\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 The first prerequisite to creating an effective amnesty program is the threat of severe sanctions for those wh\hich\af0\dbch\af0\loch\f29 
o lose the race for amnesty.  Since cartel activity is treated as a criminal, civil, and/or administrative offense depending on the jurisdiction, authorities around the world rely on a range of sanctions and then apply these sanctions with varying degrees
\hich\af0\dbch\af0\loch\f29  \hich\af0\dbch\af0\loch\f29 of severity.  So how does one determine what constitutes a severe sanction?   
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
I think most people would agree that the threat of criminal sanctions and individual jail sentences passes the test and provides the foundation for an effective leniency progra\hich\af0\dbch\af0\loch\f29 m.}{\cs15\super\loch\af29\insrsid12084293 \chftn 
{\footnote \pard\plain \ql \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\cs15\super\insrsid12084293 \chftn }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
For example, the United States treats hardcore cartel offenses -- such as price-fixing, bid-rigging, and customer- and market-all\hich\af0\dbch\af0\loch\f29 
ocation agreements -- as felony crimes.  Individuals and corporations are subject to prosecution.  On June 22, 2004, the U.S. criminal antitrust statute was amended to raise the statutory maximum jail sentence for individuals from three years to ten years
\hich\af0\dbch\af0\loch\f29 .\hich\af0\dbch\af0\loch\f29   Individuals also face fines of up to $1 million or higher.  Corporate criminal fines can and often do exceed $100 million.  For example, F.}{\loch\af29\insrsid12084293 \~}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Hoffmann-La Roche (}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 HLR}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 
\'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 ) was fined $500 million for its role in the vitamin cartel.  In addition to being the hig\hich\af0\dbch\af0\loch\f29 
hest antitrust fine, the HLR fine is also the highest criminal fine ever obtained in the United States against any defendant under any criminal statute. }}}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
  Most jurisdictions, however, do not treat hardcore cartel activity as a crime, and they do not prosecute individual participants as criminals.  That raises the issue whether a jurisdiction can have a successful amnesty program if it does not treat car
\hich\af0\dbch\af0\loch\f29 
tel offenses as a crime and does not put offending executives in jail?  My answer is yes; it is possible to have an effective amnesty program outside of a criminal antitrust regime.  However, there are, in my opinion, two significant caveats.  One, if a j
\hich\af0\dbch\af0\loch\f29 u\hich\af0\dbch\af0\loch\f29 
risdiction relies primarily on financial penalties alone to sanction cartel conduct, then the fines must be severely punitive if they are going to attract amnesty applicants.  Two, all else being equal, a jurisdiction without individual liability and crim
\hich\af0\dbch\af0\loch\f29 i\hich\af0\dbch\af0\loch\f29 nal sanctions will never be}{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  as effective }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
at inducing amnesty applications as a program that does. 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 The Perceived Risks Must Outweigh The Potential Rewards}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 .  Regardless of whether a cartel is subject to criminal or administrative sanctions, it is axiomatic\hich\af0\dbch\af0\loch\f29 
 that cartel activity will not be adequately deterred nor reported if the potential penalties are perceived by firms and their executives as outweighed by the potential rewards.  How punitive do the fines need to be to induce amnesty applications?  I don}
{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 t\hich\af0\dbch\af0\loch\f29  know of any formula, but the fine levels currently being imposed by the EU provide a good model.
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \sbknone\linex0\headery1440\footery576\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
The administrative fines currently being imposed by the EU are significantly greater than the criminal fines being imposed for conduct of similar scope in t\hich\af0\dbch\af0\loch\f29 
he United States.  That is true not just in terms of the total fines imposed but, more importantly, also in terms of the relative level of the fines in proportion to the amount of commerce affected by the company}{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s participation in each jurisdiction.  In t\hich\af0\dbch\af0\loch\f29 
he United States, companies that fail to provide timely cooperation often pay fines that amount to 30 percent or more of the revenue generated by the sale of the price-fixed product or service during the entire duration of the conspiracy.  Fines in Canada
\hich\af0\dbch\af0\loch\f29  \hich\af0\dbch\af0\loch\f29 
are similar in magnitude.  In Europe, latecomers can expect to pay much more.  In terms of deterrence, that makes absolute sense.  The EU does not have criminal powers.  It can not put individual offenders in jail.  So, it relies on the threat of heavy fi
\hich\af0\dbch\af0\loch\f29 n\hich\af0\dbch\af0\loch\f29 
es to deter cartels and induce amnesty applications.  For jurisdictions that do not have criminal sanctions and rely solely on civil or administrative fines, the EU is a model of success.  However, be advised, that if a jurisdiction relies on fines alone 
\hich\af0\dbch\af0\loch\f29 t\hich\af0\dbch\af0\loch\f29 o deter cartel activity, and it is not able to obtain  fines of the same }{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 relative magnitude }{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 as the EU, then it may not be able to attract amnesty applicants.  Fines must be sufficiently punitive that they will not be viewed simply as a tax or a cost of doi\hich\af0\dbch\af0\loch\f29 ng business.
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
Criminal Sanctions Provide The Greatest Inducement To Cooperation}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
.  A few moments ago, I said that, all else being equal, a jurisdiction without individual liability and criminal sanctions will never be}{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  as effective }{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 at inducing amnesty applic\hich\af0\dbch\af0\loch\f29 
ations as a program that does.  Individuals stand the most to lose and so avoiding jail sentences is the greatest incentive for seeking amnesty.  Common sense suggests that the threat of individual exposure will tilt the balance at the margins such that s
\hich\af0\dbch\af0\loch\f29 o\hich\af0\dbch\af0\loch\f29 me companies will report violations that they would not otherwise have reported if they were only facing financial penalties.  However, this view is informed by more than common sense.     
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
We are observing firsthand in some of our investigations how the \hich\af0\dbch\af0\loch\f29 
threat of criminal prosecution in the United States has deterred a significant number of global cartels from extending their conspiracy into the United States.  We have uncovered cartels that operated profitably and illegally in Europe, Asia, and elsewher
\hich\af0\dbch\af0\loch\f29 e\hich\af0\dbch\af0\loch\f29 
 around the world, but did not expand their cartel activity to the United States solely because it was not worth the risk of U.S. sanctions.  I am referring to cartels that had every opportunity to target U.S. consumers, because they sold in the U.S. mark
\hich\af0\dbch\af0\loch\f29 e\hich\af0\dbch\af0\loch\f29 
t.  Indeed, in some cases, the U.S. market was the largest and potentially most profitable but the collusive conduct still ceased at the border.  Why?  The answer, from the mouths of the cartel members and verified by our investigators, is that the execut
\hich\af0\dbch\af0\loch\f29 i\hich\af0\dbch\af0\loch\f29 ves did not want to risk getting caught and going to jail in the United States.  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
This specific gerrymandering of collusive activities should come as no surprise, because hardcore cartel activity is pure premeditated conduct.  We routinely find evidence t\hich\af0\dbch\af0\loch\f29 
hat cartel members know full well they are breaking the law.  They discuss the need to be careful and to conceal their activity.  They adopt code names, use prepaid calling cards, stash incriminating documents in attics, falsify documents, and take other 
\hich\af0\dbch\af0\loch\f29 s\hich\af0\dbch\af0\loch\f29 
teps to avoid detection.  However, in the cases that I am referring to, the cartel members weighed the risks of breaking laws around the world and decided that the United States was one country where they were unwilling to cross over the line.  They were 
\hich\af0\dbch\af0\loch\f29 s\hich\af0\dbch\af0\loch\f29 imply not willing to risk going to jail!  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par 
\par 
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sftnbj \pard\plain \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tqc\tx4680\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\b\loch\af29\insrsid12084293 \tab \hich\af0\dbch\af0\loch\f29 III.  }{\b\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Fear Of Detection}{
\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
The second prerequisite to building an effective amnesty program is instilling a genuine fear of detection.  If firms perceive the risk of being caught by antitrust authorities as ve\hich\af0\dbch\af0\loch\f29 
ry small, then stiff maximum penalties will not be sufficient to deter cartel activity.  Likewise, if cartel members do not fear detection, they will not be inclined to report their wrongdoing to authorities in exchange for amnesty.  Therefore, antitrust 
\hich\af0\dbch\af0\loch\f29 a\hich\af0\dbch\af0\loch\f29 
uthorities must cultivate an environment in which business executives perceive a significant risk of detection by antitrust authorities if they either enter into, or continue to engage in, cartel activity.  
\par 
\par }{\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 The Race To The Courthouse}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 . To achieve this obj\hich\af0\dbch\af0\loch\f29 
ective, it is critical that cartel investigators have access to every available law enforcement power to ensure that }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 crime in the suites}
{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  is treated the same as crime in the streets.  The more anxious a company is about the fact that its cartel participat
\hich\af0\dbch\af0\loch\f29 
ion may be discovered by the government, the more likely it is to report its wrongdoing in exchange for amnesty.  If cartel members perceive a genuine risk of detection, then an amnesty program can build on that fear and create distrust and panic among th
\hich\af0\dbch\af0\loch\f29 e\hich\af0\dbch\af0\loch\f29 
 cartel members.  The cartel members can no longer afford to trust one another.  The rewards for self-reporting are too great, the consequences of getting caught too severe.  The dynamic literally creates a race to be the first to the enforcer}{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s office.   
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
For example, consider a scenario where five members of a cartel are scheduled to hold an emergency meeting.  When the meeting starts, there is an empty seat at the table.  One of the conspirators has not returned calls and has unexpectedly not arrived at
\hich\af0\dbch\af0\loch\f29 
 the meeting.  One of the cartel members at the meeting starts to get nervous.  Has the missing cartel member had a change of heart and abandoned the cartel?  Has he already reported the others to the government?  Or did he just miss his plane?  In this e
\hich\af0\dbch\af0\loch\f29 n\hich\af0\dbch\af0\loch\f29 
vironment, with the risk of detection and the stakes so high, who can you trust?  Each member of a cartel knows that any one of its co-conspirators can report the others in exchange for total amnesty }{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \endash }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  a decision that will seal their fate.  Imagine the vul\hich\af0\dbch\af0\loch\f29 nerability of being in that position and asking yourself, }{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Can I really trust my competitors to look out for my best interests?}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29    
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29    
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 The U.S. Individual Leniency  Policy}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 .  If a company detects a violation and its}{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  employees are subject to individual ja\hich\af0\dbch\af0\loch\f29 il sentences (in}{\i\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29  at least one }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
of the jurisdictions where the offense was committed), then the company is not only in a race with its competitors but also with its culpable employees, since they have the most to lose.  The Individual Leniency Program is ava\hich\af0\dbch\af0\loch\f29 
ilable to individuals who approach the Division on their own behalf, not part of a company proffer or confession, and report anticompetitive activity.}{\cs15\super\loch\af29\insrsid12084293 \chftn {\footnote \pard\plain 
\ql \fi720\li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\cs15\super\insrsid12084293 \chftn }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 See, U.S. Department of Justice Individual }{
\f21\insrsid12084293 Leniency Policy (1994), }{\i\f21\insrsid12084293 available at }{\f21\insrsid12084293 http://www.usdoj.gov/atr/public/guidelines/0092.htm.
\par }}}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29   Individuals who cooperate through this Program receive amnesty and a promise of non-prosecution for the\hich\af0\dbch\af0\loch\f29 
 anticompetitive activity they report.  While we do not receive individual amnesty applications at the same rate as company applications, the individual amnesty program helps prevent companies from covering up their misconduct.  }{
\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 The real value and measure \hich\af0\dbch\af0\loch\f29 
of the Individual Leniency Program is not in the number of individual applications we receive, but in the number of corporate applications it generates.  }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
It works because it acts as a watchdog to ensure that companies report the conduct themselves. 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 It is\hich\af0\dbch\af0\loch\f29 
 easy to imagine how the threat of jail sentences for culpable executives can alter a corporation}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s decision whether to self-report.  This would obviously occur when the individuals who influence or make the decision whether to report are the same ones who\hich\af0\dbch\af0\loch\f29 
 face jail time if they do not win the race for amnesty.   Additionally, it will take place any time the individuals with exposure are valued by the company.  However, self-preservation or humanitarian concerns are }{\i\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 not}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  the only factors at play here.  The t\hich\af0\dbch\af0\loch\f29 
hreat of individual exposure can tilt the balance and cause a company to seek amnesty even in the absence of personal exposure by the company}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 s decision makers.  Let me give you an example.
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Creating A Race Between The Company And Its Employee}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 .  Imagine t
\hich\af0\dbch\af0\loch\f29 
he not uncommon scenario in which upper management first becomes aware of price fixing by one of its employees when a lower-level employee, say a secretary, reports the wrongdoing to the general counsel as part of a compliance audit.  The secretary confes
\hich\af0\dbch\af0\loch\f29 s\hich\af0\dbch\af0\loch\f29 
es to the general counsel that, at the direction of her superior, she has forwarded and placed calls to and from competitors, faxed draft price sheets to a competitor, and observed other suspicious conduct by her boss.  Assume further that, after conducti
\hich\af0\dbch\af0\loch\f29 n\hich\af0\dbch\af0\loch\f29 
g a discrete internal investigation, management concludes that the executive has been fixing prices with competitors and would like nothing more than to immediately fire the errant executive who disregarded stated company policy and engaged in cartel acti
\hich\af0\dbch\af0\loch\f29 v\hich\af0\dbch\af0\loch\f29 
ity.  Finally, assume that no one in a position to influence the decision whether to self-report was involved in the conduct in any way, and therefore that none of the decision makers are at personal risk.  Thus, self-preservation and humanitarian concern
\hich\af0\dbch\af0\loch\f29 s\hich\af0\dbch\af0\loch\f29  are not at issue in this set of facts.  So is the decision whether or not to seek}{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  corporate }{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 amnesty influenced by the fact that the disfavored executive faces potential individual criminal exposure?  Absolutely.  So long as one of its employees has indivi\hich\af0\dbch\af0\loch\f29 
dual exposure, the company remains at great risk.  If the company self-reports the conduct under the Corporate Leniency Policy, then the company and all of its cooperating executives will avoid criminal prosecution.  However, if the company delays or deci
\hich\af0\dbch\af0\loch\f29 d\hich\af0\dbch\af0\loch\f29 es not to report, then the company puts itself in a race for leniency with its own employees.}{\cs15\super\loch\af29\insrsid12084293 \chftn {\footnote \pard\plain 
\ql \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\cs15\super\insrsid12084293 \chftn }{\f21\insrsid12084293 As noted above in the \'93empty chair\'94
 example, once the company terminates the executive\rquote s participation in the cartel and it withdraws from the cartel, it will send a signal to competitors that the race for leniency is on f
or them as well, and the company will be at even greater risk if it does not promptly report the activity.  }{\insrsid12084293   }}}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
In this example, if the company does not report the conduct first, then the executive may come forward on his own and report the conduct for his own protection\hich\af0\dbch\af0\loch\f29 
, thereby potentially leaving the company out in the cold.  Obviously, if the executive is fired and becomes disgruntled, the likelihood that he will report the conduct increases.  If the secretary gets nervous, say, after talking to a relative who convin
\hich\af0\dbch\af0\loch\f29 c\hich\af0\dbch\af0\loch\f29 
es her that she has real criminal exposure for her own conduct, she may decide to report the conduct.  Alternatively, if the secretary simply becomes disillusioned with her career track and decides that she is being retaliated against as a whistle blower,
\hich\af0\dbch\af0\loch\f29  \hich\af0\dbch\af0\loch\f29 she may decide to report.  In every one of these scenarios, we will be there waiting for the executive or the secretary with open arms and a copy of the Division}{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s Individual Leniency Program.  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tqc\tx4680\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \tab }{\b\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 IV.}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29   }{
\b\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Amnesty Plus, Cartel Profiling, And Other Proactive St\hich\af0\dbch\af0\loch\f29 rategies}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29   
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\ul\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
Of course, cultivating a fear of detection requires that an authority has a demonstrated track record of detecting cartels.   Next, I want to share with you some of the practices that we have used to solidify the Division}{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s reputation.  As I me\hich\af0\dbch\af0\loch\f29 
ntioned earlier, we are currently investigating over 50 suspected international cartels.  Amazingly, over half of these investigations were initiated as a result of leads generated during an investigation of a completely separate market.  What that means 
\hich\af0\dbch\af0\loch\f29 i\hich\af0\dbch\af0\loch\f29 
s that every time the Antitrust Division opens an international cartel investigation, the chances are better than even that it will also uncover a second, separate conspiracy.  Our success in detecting cartels by }{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 rolling}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  one investigation into another is
\hich\af0\dbch\af0\loch\f29  a result of a number of proactive strategies that we use for uncovering antitrust offenses.  Before discussing these strategies, however, let me offer two prime examples of the }{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 rollover}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  pattern.  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 It has been widely acknowledged that one of the keys t\hich\af0\dbch\af0\loch\f29 o the Division}{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s success in cracking the worldwide vitamin cartel was the cooperation provided by Rh}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'f4}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 ne-Poulenc SA pursuant to its amnesty application.  However, what may not be fully appreciated is that the Division had been investigating the vitamin indu\hich\af0\dbch\af0\loch\f29 
stry for more than two years before Rh}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'f4}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 ne-Poulenc came forward.  By the time Rh}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 
\'f4}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 ne-Poulenc sought amnesty, the investigation had already uncovered conspiracies to fix prices and allocate smaller vitamin markets, such as naicin, naicinamide, and choline chl
\hich\af0\dbch\af0\loch\f29 oride.  These investigations were generating leads that indicated the existence of cartel activity in the massive vitamin A, C, and E markets.  It was the development of these leads that precipitated Rh}{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'f4}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 ne-Poulenc}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s decision to seek amnesty.  With one inve\hich\af0\dbch\af0\loch\f29 
stigation rolling over into the next, the Division eventually uncovered cartel activity in 12 different vitamin markets.  Our investigation led to the prosecution of 12 companies (three U.S., three German, three Japanese, two Swiss, and one Canadian) and 
\hich\af0\dbch\af0\loch\f29 1\hich\af0\dbch\af0\loch\f29 4 individuals, nearly $1 billion in fines, and the incarceration of 11 executives, including 6 foreign nationals. 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  The second example involves the fruits of the Division}{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s investigation of the worldwide lysine cartel.  This example is particularly instru\hich\af0\dbch\af0\loch\f29 
ctive because, while the targeted markets here are not nearly as closely related as they were in the vitamin cases, each investigation led directly to the next.  The connection between the Division}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 
\rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s lysine and citric acid investigations is generally known\hich\af0\dbch\af0\loch\f29 
 because of the publicity surrounding the prosecution of Archer Daniels Midland and its former high-ranking executives.  However, what is not as evident is that the investigation and prosecution of the international }{\i\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 citric acid}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  cartel led to the investigat\hich\af0\dbch\af0\loch\f29 ion and prosecution of the international }{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
sodium gluconate}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  cartel, which resulted in the investigation and prosecution of the international }{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 sodium erythorbate}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  cartel, which, in turn, led to the investigation and prosecution of the }{\i\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 maltol}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 cartel.  In all, 12}{\loch\af29\insrsid12084293 \~}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
companies (three U.S., two Korean; two Japanese; two Swiss; two Dutch; and one French) and 14 individuals from 9 different countries (United States, Korea, Japan, Germany, Switzerland, Austria, Italy, Netherlands, and France) were convicted and paid over 
\hich\af0\dbch\af0\loch\f29 $250 million in criminal fines as a result of the these five interconnected investigations.
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 The Amnesty Plus Program}{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 .  In response to the recurring patterns described above, the Division has developed a number of proactive strategies for uncovering antitr\hich\af0\dbch\af0\loch\f29 
ust offenses.  First, the Division has developed a policy called }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Amnesty Plus.}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 
\'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29   The policy takes a proactive approach to attracting amnesty applications by encouraging subjects and targets of ongoing investigations to consider whether they may qualify fo
\hich\af0\dbch\af0\loch\f29 
r amnesty in other markets where they compete.  So even though a company may not qualify for amnesty for the initial matter under investigation, the value of its assistance in disclosing a second cartel will lead to amnesty for the second offense and a su
\hich\af0\dbch\af0\loch\f29 b\hich\af0\dbch\af0\loch\f29 stantial additional reduction (the }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 plus}{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 ) in the calculation of the fine for its participation in the first offense.  The Division}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s Amnesty Plus program creates an attractive inducement for encouraging companies who are already under investigation to rep\hich\af0\dbch\af0\loch\f29 
ort the full extent of their antitrust crimes and begin to put the matters behind them.  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Cartel Profiling}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
.  As indicated from the vitamin and lysine examples discussed above, the Division will not relax and wait for companies to come forward and report \hich\af0\dbch\af0\loch\f29 new violations.  Instead, the Division has had success engaging in }{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 cartel profiling}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 techniques aimed at ferreting out these violations.  The Division will target its proactive efforts in industries where we suspect cartel activity in adjacent markets or \hich\af0\dbch\af0\loch\f29 
which involve one or more common players from other cartels.  When we are able to identify culpable executives, we begin digging deeper to determine whether they had pricing authority on other products over time and then for indicia of collusion in those 
\hich\af0\dbch\af0\loch\f29 p\hich\af0\dbch\af0\loch\f29 
roducts as well.  We might investigate who mentored the culpable executives and what other products they were responsible for overseeing, and we keep digging.  We will ask executives, who are subpoenaed and compelled to provide sworn testimony under penal
\hich\af0\dbch\af0\loch\f29 t\hich\af0\dbch\af0\loch\f29 
y of perjury, not just about their knowledge of price fixing in the market under investigation, but whether they have any information of any cartel activity in any other markets as well.  This last practice is commonly referred to as the }{
\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 omnibus question.}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29   

\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
Companies are aware of our success in uncovering related offenses through the }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 cartel profiling}{\loch\af29\insrsid12084293 
\loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  technique, and so they often turn the company upside down to try to discover any additional wrongdoing before we do.  While this is happening, cartel memb
\hich\af0\dbch\af0\loch\f29 
ers in unrelated markets that are not currently under investigation frequently become nervous as well.  For example, assume we are investigating Corporations A, B, and C for price fixing on product one.  Unknown yet to the government, A and B  may have al
\hich\af0\dbch\af0\loch\f29 s\hich\af0\dbch\af0\loch\f29 
o fixed prices with companies X and Y on a totally unrelated product.  With the overlap of two companies under investigation in a second product market, you can bet that we will take a look at the second product market as well for possible collusion.  Eve
\hich\af0\dbch\af0\loch\f29 n\hich\af0\dbch\af0\loch\f29 
 if there was no overlap in companies between the two markets, if one of the past or present leaders of the cartel in product one at one time had pricing responsibility in this second market, it may cause us to eventually expand our investigation to the s
\hich\af0\dbch\af0\loch\f29 e\hich\af0\dbch\af0\loch\f29 
cond product.  Companies recognize this risk and so, in the scenario I just described, A or B will report the conduct on the second product in return for Amnesty Plus.  However, if they do not hurry, they may both be beaten by company X or Y after it lear
\hich\af0\dbch\af0\loch\f29 n\hich\af0\dbch\af0\loch\f29 
s that members of its cartel are under investigation for fixing prices on another product.  A company that is fortunate enough to uncover its participation in a second conspiracy before we do is advised to take advantage of the Leniency Program while it i
\hich\af0\dbch\af0\loch\f29 s\hich\af0\dbch\af0\loch\f29  still available.  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Penalty Plus -- The }{\ul\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{\ul\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 Stick}{\ul\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29  Side To The Amnesty Plus Carrot}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
.  Companies that elect not to take advantage of the Amnesty Plus opportunity risk potentially harsh consequences.   If a company is knowledgeable about a second offense and d\hich\af0\dbch\af0\loch\f29 
ecides not to report it, and the conduct is later discovered and successfully prosecuted, where appropriate, we will urge the sentencing court to consider the company}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s and any culpable executive}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s failure to report the conduct voluntarily as an aggravatin\hich\af0\dbch\af0\loch\f29 
g sentencing factor.  We will request that the court impose a term and conditions of probation for the company, and we will pursue a fine or jail sentence at or above the upper end of the Sentencing Guidelines range.}{
\cs15\super\loch\af29\insrsid12084293 \chftn {\footnote \pard\plain \ql \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\cs15\super\insrsid12084293 \chftn }{\f21\insrsid12084293 
For example, in one recent \'93penalty plus case\'94 involving Hoechst AG, the Division asked the court to depart upward from the top of the U.S. Sentencing Guidelines (\'93U.S.S.G.) range, due to the company\rquote 
s recidivism as an antitrust offender, and to impose a sentence on the corporation that was roughly 30% above the maximum Guideline fine and 130% above the minimum Guideline fine.  In that case, Hoechst\rquote 
s sales (not illegal profits) affected by the conspiracy amounted to $17\~million, and it ended up paying a fine of $12 million \endash  roughly 70% of the volume of affected commerce.  Furthermore, three Hoechst executives were \'93carved out\'94
 of the plea agreement.  If the company had reported the conduct when it had the chance in connection with the earlier prosecution, it would have paid zero fine and its executives would have been given full nonprosecution protection. }{
\b\f21\insrsid12084293  }}}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29    Moreover, where multiple convictions\hich\af0\dbch\af0\loch\f29  occur, a company}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 s or individual}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s Guidelines calculations may be increased based on the prior criminal history.  For a company, the failure to self-report under the Amnesty Plus program could mean the difference between a potential fine as high as 80 per\hich\af0\dbch\af0\loch\f29 
cent or more of the volume of affected commerce versus no fine at all on the Amnesty Plus product.  For the individual, it could mean the difference between a lengthy jail sentence and avoiding jail altogether.
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tqc\tx4680\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\b\loch\af29\insrsid12084293 \tab \hich\af0\dbch\af0\loch\f29 V.  }{\b\ul\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
Transparency In Enforcement Policies}{\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 T\hich\af0\dbch\af0\loch\f29 
he third and final hallmark of an effective Amnesty Program is the need for transparency to the greatest degree possible throughout the enforcement program.  Self-reporting and cooperation from offenders have been essential to our ability to detect and pr
\hich\af0\dbch\af0\loch\f29 o\hich\af0\dbch\af0\loch\f29 
secute cartel activity.  Cooperation from violators, in turn, has been dependent upon our readiness to provide transparency throughout our anti-cartel enforcement program so that a company can predict with a high degree of certainty how it will be treated
\hich\af0\dbch\af0\loch\f29  \hich\af0\dbch\af0\loch\f29 if it reports the conduct and what the consequences will be if it does not.
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
Our experience has been that transparency must include not only explicitly stated standards and policies, but also clear explanations of prosecutorial discretion in applying thos\hich\af0\dbch\af0\loch\f29 
e standards and policies.  The Division has sought to provide transparency in the following enforcement areas: (1) transparent standards for opening investigations; (2)}{\loch\af29\insrsid12084293 \~}{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 transparent standards for deciding whether to file criminal charges; (3)}{\loch\af29\insrsid12084293 \~}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 transparent pr\hich\af0\dbch\af0\loch\f29 
osecutorial priorities; (4) transparent policies on the negotiation of plea agreements; (5) transparent policies on sentencing and calculating fines; and (6) transparent application of our Leniency Program.}{\cs15\super\loch\af29\insrsid12084293 \chftn 
{\footnote \pard\plain \ql \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\cs15\super\insrsid12084293 \chftn }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
For a more detailed discussion on trans\hich\af0\dbch\af0\loch\f29 parency in enforcement, with references to Antitrust Division public statements in each of the areas outlined above, see, }{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'93}{
\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 Transparency In Enforcement Maximizes Cooperation From Antitrust Offenders,}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \'94}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
 by Gary R. Spratling, Deputy Assistant Attorney General,\hich\af0\dbch\af0\loch\f29  Antitrust Division, before Fordham Corporate Law Institute (October 15, 1999).  }}}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
  With the time I have remaining, I want to focus\hich\af0\dbch\af0\loch\f29  on how transparency is critical to an effective Leniency Program. 
\par 
\par \hich\af0\dbch\af0\loch\f29 The Antitrust Division has a written Leniency Policy and has published a number of papers in order to clarify the Division}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 s application of its Corporate Leniency Program.  We have also c\hich\af0\dbch\af0\loch\f29 
reated a model conditional amnesty letter that is publicly available for prospective applicants to review.  In addition, representatives from the Division regularly speak about the Leniency Program before national and international bar associations, trade
\hich\af0\dbch\af0\loch\f29  \hich\af0\dbch\af0\loch\f29 
groups, other law enforcement agencies, and the media.   However, in order for a Leniency Program to work, an antitrust authority must do more than just publicize its policies and educate the public.  It has to be willing to make the ultimate sacrifice fo
\hich\af0\dbch\af0\loch\f29 r\hich\af0\dbch\af0\loch\f29  transparency - the abdication of prosecutorial discretion. 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
Our Leniency Program is inherently transparent because we have eliminated, to a great extent, the exercise of prosecutorial discretion in its application.  Obviously, this is a very difficult th\hich\af0\dbch\af0\loch\f29 
ing to do, and we have had to swallow hard on a number of amnesty applicants that we would have preferred to prosecute.  However, recall that we had roughly 15}{\loch\af29\insrsid12084293 \~}{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
years of experience with a Leniency Program that was designed to maintain a greater degree of pr\hich\af0\dbch\af0\loch\f29 
osecutorial discretion, and it simply did not work.  Prospective amnesty applicants come forward in direct proportion to the predictability and certainty of whether they will be accepted into the program.  If a company cannot accurately predict how it wil
\hich\af0\dbch\af0\loch\f29 l\hich\af0\dbch\af0\loch\f29 
 be treated as a result of its corporate confession, our experience suggests that it is far less likely to report its wrongdoing, especially where there is no ongoing government investigation.  Uncertainty in the qualification process will kill an amnesty
\hich\af0\dbch\af0\loch\f29  \hich\af0\dbch\af0\loch\f29 program.  
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tqc\tx4680\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 \tab }{\b\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 VI.  }{\b\ul\loch\af29\insrsid12084293 
\hich\af0\dbch\af0\loch\f29 Conclusion}{\loch\af29\insrsid12084293 
\par }\pard \ql \li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 {\loch\af29\insrsid12084293 
\par \sect }\sectd \margbsxn1152\sbknone\linex0\headery1440\footery1152\sectdefaultcl\sectrsid12084293\sftnbj \pard\plain \ql \fi720\li0\ri0\widctlpar\tx0\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\faauto\rin0\lin0\itap0 
\fs24\lang1033\langfe3081\cgrid\langnp1033\langfenp3081 {\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 The Division}{\loch\af29\insrsid12084293 \loch\af29\dbch\af0\hich\f0 \rquote }{\loch\af29\insrsid12084293 \hich\af0\dbch\af0\loch\f29 
s philosophy has always been that, wherever possible, we will tilt our program in favor of finding ways to make companies eligible for our program rather than looking for ways to keep them out.  We maximize the o\hich\af0\dbch\af0\loch\f29 
pportunities for companies to report conduct, and we are extremely adverse to practices that may create disincentives.  As a result, the U.S. private antitrust bar has confidence that they can accurately advise clients as to whether they are likely to qua
\hich\af0\dbch\af0\loch\f29 l\hich\af0\dbch\af0\loch\f29 
ify for amnesty under our program.  If companies cannot confidently predict how an enforcement authority will apply its leniency program, it may ultimately decide against self reporting and cooperation, and existing cartels may go unreported and unpunishe
\hich\af0\dbch\af0\loch\f29 d\hich\af0\dbch\af0\loch\f29 
.  Our experience has been if you abide by this philosophy and your leniency program rests on a foundation of severe sanctions, high detection rates, and transparent enforcement policies, then cartel members will come knocking on your door.
\par }