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DOJ to Executives: We’re Watching You

We’ve previously written about how the Yates Memo announced an increased focus on individual accountability, and that the DOJ’s broader focus on individual accountability would likely encourage the Antitrust Division to increase its efforts to prosecute individuals for antitrust violations.

But if anyone was left with any doubt that the Antitrust Division would take further steps to hold individuals accountable for antitrust violations, that has now been dispelled:  on February 19, 2016, Deputy Assistant Attorney General for Criminal Enforcement Brent Snyder announced that although it already had a long record with respect to individual accountability, the Antitrust Division was taking steps to “do even better.”

The Antitrust Division’s Long History of Pursuing Individuals

As we noted in November, the Antitrust Division has long had a stated policy of pursuing individuals in addition to corporations for antitrust violations.  As Snyder recently explained, the Antitrust Division has prosecuted more individuals than corporations over the last 25 years:

•  In the 1990s, the Antitrust Division prosecuted almost equal numbers of individuals and corporations;

•  From 2000-2009, the Antitrust Division prosecuted more than twice as many individuals as corporations; and

•  During the last five years, the Antitrust Division prosecuted almost three times as many individuals as corporations.

During this time, the average sentence also tripled:  it jumped from an average of 8 months in the 1990s to 24 months for 2010-2015.

To be sure, these numbers do not necessarily reflect that the Antitrust Division is more interested in prosecuting individuals than corporations:  some of the numerical differences may simply reflect that for every corporation involved in an antitrust violation, there are typically multiple individuals at that corporation who are also responsible for the violation.  And the Antitrust Division has made clear that it does not intend to prioritize individual accountability ahead of corporate responsibility.  Rather, Snyder explained: “Corporate and individual accountability are not an ‘either/or’ proposition.  They go hand-in-hand.”  He elaborated that corporate prosecutions and fines remain important because, among other reasons, they “punish firms that are in business to make money by taking money away from them,” promote deterrence, and incentivize compliance with laws.

The New Steps

Still, Snyder announced several changes that would further the Antitrust Division’s increased efforts to hold individuals accountable for antitrust violations.  Those steps include:

•  New internal procedures to ensure that Antitrust Division criminal offices systematically identify all culpable individuals as early in the investigative process as feasible and bring cases against individuals as quickly as evidentiary sufficiency permits.

•  More comprehensive review of the organizational structure of culpable companies to ensure that the Antitrust Division identifies and investigates all senior executives who potentially condoned, directed, or participated in the criminal conduct.

Snyder also stressed that the Antitrust Division “is not content merely to charge low-level employees” and was “committed to holding accountable the highest-level culpable executives at conspirator companies.”  For example, in the auto parts investigation, the Antitrust Division has prosecuted nine parent or subsidiary presidents, seven vice presidents, two executive managing directors, one CFO, and 30 division directors and general managers.

Key Impacts of These Changes

It is perhaps no surprise that these changes are likely to lead to an increase in the number of individual executives who are investigated and, ultimately, prosecuted.

What might be less apparent, however, is that this policy may also increase the incentives for corporations involved in antitrust violations to cooperate with the Antitrust Division and apply for the Antitrust Division’s Leniency Program.  As Snyder explained:  “when a corporation self-reports before the division has received information about the cartel, its qualifying current officers, directors, and employees who admit their involvement in the offense and cooperate against their co-conspirators receive protection from criminal conviction and the resulting punishment along with the corporate offender.”  The availability of leniency for individual defendants will likely prove an additional incentive for corporations to participate in the Leniency Program.  (Note, though, that the Yates Memo also announced new requirements for corporations that wish to get credit for cooperation; we discussed those more fully here.)