Section 1 of the Sherman Act (15 U.S.C. § 1) is the primary federal statute used for challenging criminal cartel behaviour/effects in the United States. Section 1 states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” While Section 1 applies to a variety of agreements in restraint of trade, only “hard-core” cartel activity − ie, price-fixing, bid-rigging, and market or customer allocation agreements – is prosecuted criminally in the United States.
All 50 states and the District of Columbia have some type of antitrust or unfair trade practice statute, most of which are based on and/or interpreted consistently with the federal antitrust laws. Every state provides for some form of criminal or civil liability for such violations, except that enforcement is not common in many states when there is a federal enforcement action and sanctions tend to be less severe than under federal law.
The Antitrust Division of the United States Department of Justice (DOJ) is the only federal government agency that can criminally prosecute cartel conduct. The potential maximum criminal penalties for a Section 1 violation are (i) a USD100 million fine per offence for corporations; and (ii) ten years in prison and a USD1 million fine per offence for individuals. Under the Alternative Fines Act (18 U.S.C. § 3571(d)), courts may impose fines in excess of the statutory maximum, which would be a fine of up to twice the gross gain from the illegal conduct or twice the gross loss to the victims.
The DOJ pursues criminal sanctions for hard-core Section 1 violations; but the DOJ, Federal Trade Commission, and states can also pursue civil sanctions for other collusive conduct. For example, the DOJ and FTC often seek injunctive relief for alleged civil violations, and the antitrust agencies occasionally seek remedies such as restitution, disgorgement of profits, and external compliance monitors. State attorneys general are responsible for the public enforcement of State laws and nearly all states permit private civil damage actions.
Parties that purchased directly from cartel participants may sue for treble damages, as well as injunctive relief under Sections 4 and 16 of the Clayton Act, respectively (15 U.S.C. §§ 15, 26). The ability to recover treble damages provides a significant economic incentive for private parties to sue. While private follow-on suits against cartel conduct are common in the United States, such suits can face significant challenges, including strict standards for pleading a claim, strict standards for class certification, and a shorter statute of limitations period than in criminal cases (four years in civil versus five years in criminal).
The DOJ’s criminal enforcement efforts, however, facilitate private parties in follow-on civil damages actions. First, jury convictions and guilty pleas constitute prima facie evidence of a cartel violation in a parallel civil case and thus help establish liability. Second, under the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA), a successful leniency applicant can qualify for a reduction in damages from treble to single, and avoid joint and several liability if it provides “satisfactory co-operation” to the plaintiff. Thus, a co-operating leniency applicant can provide further assistance to plaintiffs in establishing liability for additional conduct (if the scope of the case is expanded) as well as in proving damages.
Parties may also bring a private action under state laws for challenging cartel conduct. While state laws may be similar to federal antitrust laws, the laws vary from state to state and may be more limited or more expansive in scope on the conditions of bringing a private right of action for antitrust claims. For example, a number of states permit indirect purchasers to sue for damages.
In the United States, cartel conduct is defined by Section 1 of the Sherman Act. Section 1 states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” However, Section 1 by its very terms applies to a broad range of agreements in the restraint of trade, not only cartel conduct. Cartel conduct is limited to “hard-core” activity of the type that is prosecuted criminally in the United States − ie, price-fixing, bid-rigging, and market- or customer-allocation agreements. Many competitor collaborations, such as joint ventures, are generally not defined as “cartel” conduct. That said, there is not a strict, clear definition of what constitutes a “cartel” or “hard-core” collusive conduct in the United States, and several have observed that the DOJ’s definition of “hard-core” collusive conduct has been expanding in recent years.
The statute of limitation period for criminal antitrust violations is five years. The statute of limitations period begins to run as of the last overt act in furtherance of the cartel. Notably, if any of the alleged co-conspirators committed an overt act in furtherance of the conspiracy during the prior five years, this can restart the running of the statute of limitations period. In many cases, this means the period does not begin to run until the purpose of the criminal conduct has been abandoned or accomplished with respect to the entire conspiracy. The statute of limitations period for civil antitrust actions is four years.
The statute of limitations may be extended for fraudulent concealment, which means that the defendant actively concealed the wrongdoings and that the plaintiff could not discover them, despite reasonable diligence.
If conduct occurs entirely outside the United States, the DOJ can still prosecute the participants if the conduct has an effect on US domestic or import commerce. Section 1 of the Sherman Act requires proof that the conduct involves interstate commerce or trade with foreign nations. The standard for determining whether foreign conduct has this requisite effect is articulated by the Foreign Trade Antitrust Improvements Act (FTAIA), which states that the conduct must (1) have a “direct, substantial, and reasonably foreseeable” effect on US domestic, import, or certain export commerce and (2) this effect “gives rise to” the antitrust injury. The FTAIA standard has been considered before the courts in many cases, and the contours of the FTAIA requirements remain the subject of much debate.
DOJ will consider the principles of international comity when enforcing criminal antitrust laws. The government agencies take into account whether there is significant interest of any foreign sovereign state that would be affected in determining whether to bring an action. Factors affecting the comity analysis include the effect on US commerce; the significance and foreseeability of the effects of the anti-competitive conduct on the United States; the degree of conflict with a foreign jurisdiction’s law or articulated policy; the extent to which the enforcement activities of another jurisdiction, including remedies resulting from those enforcement activities, may be affected; and the effectiveness of foreign enforcement as compared to US enforcement.
Notably, the principles of international comity are often considered after the DOJ begins an investigation; if the DOJ and a foreign authority are both investigating the same conduct, the DOJ and the foreign authority may co-ordinate their investigations. (See Antitrust Guidelines for International Enforcement and Cooperation jointly published by the DOJ and FTC.)
The DOJ will typically start a cartel investigation based on information of collusive conduct received through a leniency application (eg, “whistle-blower”), a customer or other industry participant, or a separate investigation (eg, documents seen in an antitrust merger investigation). Historically, the DOJ’s leniency programme has been the primary tool for the DOJ's criminal cartel enforcement programme, with most investigations stemming from that leniency programme.
In the leniency context, the investigation begins by receiving information and any documents from the leniency applicant. The DOJ will then often use various tools to collect additional information/material from sources other than the leniency applicant. For example, the DOJ can obtain subpoenas and/or search warrants; the DOJ may also attempt to use covert investigation means, such as monitoring telephone or email communications between the leniency applicant and other alleged conspirators. The DOJ will typically then turn to overt investigative steps, such as search warrants and grand-jury subpoenas and “drop-in” interviews of individuals.
Outside the leniency context, as noted above, an investigation is often prompted by complaints from consumers or other industry participants or through information learned in separate investigations. In addition, foreign antitrust authorities might spur the DOJ to investigate certain conduct. The DOJ will also periodically conduct a self-initiated inquiry into a particular industry or practice based on its own research. Whatever the source, the DOJ’s investigative steps and tools tend to be similar.
Search warrants and “drop-in” interviews by the DOJ are permissible and common (and usually conducted through the Federal Bureau of Investigation). The DOJ must have probable cause that a crime has been committed in order to be granted a search warrant, but the DOJ does not need to obtain a warrant to conduct a drop-in interview or conduct an interview during a search.
Under a search warrant, the DOJ (usually the FBI) may seize materials based on information described within the warrant, including documents, hardware, information stored in hardware, etc. This means that computers, personal electronic devices, and email and other electronic files can be searched and seized if the warrant provides. Agents are allowed to seize computer equipment when the agent reasonably believes the content described in the warrant may be stored there, regardless of whether the warrant specifically states the information may be in electronic form.
There are various practices and procedures that should be followed when subject to a search warrant, and counsel should be consulted to prepare guidelines in preparation for such a search. A key element, however, is to take steps to ensure nobody destroys records/evidence or impedes the execution of the search.
As for “drop-in” interviews or interviews during a search, counsel again should be consulted for guidelines to prepare employees for these. Notably, these interviews are voluntary and individuals have a right to counsel, including having counsel present during the interview.
To obtain a search warrant, the government must establish probable cause before a magistrate in the judicial district where the property to be searched is located. A search warrant must describe with particularity the property to be seized, that the property is or contains evidence of a specified criminal offence, and the exact description of the searched location. Search warrants must be executed from 6:00 am to 10:00 pm, in the absence of extenuating circumstances.
Typically, the FBI will attempt to copy files on-site rather than take computers and electronic devices from the premises, but government agents executing the search warrant are permitted to seize any and all materials that are described within the warrant. The warrant will typically require the government to examine any electronic files seized within a specified period, so that irrelevant material can be deleted or returned. For paper files, parties being investigated have little recourse for the return of files deemed irrelevant, if they are within the scope of the warrant.
Individuals and companies must not alter, destroy, falsify or make false entries in any record or document with the intent to impede, obstruct or influence the investigation or proper administration of any federal matter, including in contemplation of any such matter (ie, matters not yet commenced). To do so is a criminal violation carrying significant penalties. When companies or individuals learn of a potential criminal cartel investigation, they should prepare to preserve relevant information.
For example, companies should immediately disable any automatic deletion settings on servers or email systems and ensure that all relevant electronic information is preserved and maintained. Companies should also provide relevant employees with a written notice describing their obligation to retain and preserve electronic and written documents related to the investigation, including on their personal devices and in the cloud.
If they are presented with a valid search warrant, the company or individual will be unable to stop the government agents from executing the warrant. It is generally good practice to appoint one employee in each office to assist the DOJ/FBI (along with counsel) in the search process. This employee should respond to administrative questions raised by the agents, but is not under an obligation to respond to questions relating to the substance of the investigation. It is also generally good practice to have a counsel contact near the company offices to be “on call” in case of a search. This counsel should establish a plan for the office in preparation for any search or unannounced visit by the DOJ/FBI.
All officers and employees have a right to counsel. In interviews with the DOJ/FBI, the officers and employees may invoke the right to have counsel present. An individual’s lawyer may advise the individual during breaks, may suspend the interview on behalf of the individual, or otherwise advocate for the interests of the individual during the interview. In some instances, when the interests of the company and individual are completely aligned, company counsel can participate in the interview, with the consent of the individual.
An individual may seek his or her own counsel at any time. An individual also may refuse to have counsel at any time. If an individual’s interests diverge from the company’s interests, it is typical for an individual to have personal counsel.
The initial phase of a criminal investigation is crucial and there are several recommended steps that defence counsel should take in order to make an informed decision on the approach to the investigation. As for initial steps, defence counsel should typically (i) ensure that all potentially relevant material is preserved, (ii) communicate with the DOJ to understand further the scope and focus of the investigation (and often to open a dialogue with the DOJ), and (iii) begin conducting an internal investigation of the facts (eg, collect document material and interview employees). Each investigation is different, and the initial steps may vary, but the above are common steps taken in a DOJ cartel investigation.
In addition to a search, the DOJ can serve a grand jury subpoena duces tecum for documents and/or a subpoena ad testificandum for testimony. A subpoena is a written, legally enforceable demand that a party produce records or testimony before a grand jury on a given date. An individual who believes he or she may have criminal exposure can claim a Fifth Amendment privilege against self-incrimination and refuse to produce documents or testify. A corporation, however, generally must produce responsive documents within its possession, custody, or control in response to a grand jury subpoena.
The DOJ uses various means to obtain information other than documents in an investigation. The primary means include interviews and compelled testimony from individuals. In addition, and very commonly, co-operating companies and individuals will proffer information about the conduct (orally). This is in an effort to assist the DOJ’s investigation and receive credit for co-operation from the DOJ when it comes to negotiating a resolution of the investigation (eg, plea agreement). Other means include consensual monitoring of communications and request for information to foreign agencies.
When the DOJ issues a subpoena for document materials, the DOJ maintains the position that a company or individual must produce the materials, wherever located; however, the DOJ’s policy and practice is not to enforce this requirement when the materials are outside the United States.
Therefore, in practice, a subpoena recipient is not required to produce document materials located in other jurisdictions. Given this practice, the DOJ will often request subpoena recipients to produce documents located outside the United States on a voluntary basis.
When a subpoena recipient is not willing to produce documents from outside the United States voluntarily, the DOJ may use a variety of other methods to obtain the document. For example, the DOJ may try to obtain materials through co-operation agreements with non-US agencies or Mutual Legal Assistance Treaties (MLAT).
In the United States, attorney-client communications are protected by legal privilege. This privilege protects from disclosure any communications – written and oral – between a client and an attorney (in-house or external) that provide or seek legal advice, if those communications are kept confidential. This applies to communications with in-house counsel, as well as outside counsel. In these investigations, DOJ generally also will not seek communications between foreign counsel and their clients either. Notably, the privilege over attorney-client communications belongs to the client and therefore only the client may assert or waive the privilege.
In addition to the privilege of attorney-client communications, the DOJ will recognise attorney work product in these investigations. The attorney work product doctrine protects written and oral materials prepared by counsel during the course of a legal representation. The attorney work product doctrine applies to both in-house and outside counsel work product; the DOJ similarly will not seek disclosure of work product by foreign counsel. In cartel investigations, the DOJ will often respect other privileges and confidentiality restrictions as well (eg, data protection, privacy rules), particularly when a company is co-operating in the investigation.
In cartel investigations, it is more typical for companies and individuals to comply with the DOJ’s requests for information, particularly when subject to a subpoena. If a company or individual chooses not to comply with a subpoena, this can expose the company/individual to significant legal consequences, including an order of contempt from a court. In practice, non-compliance can also raise the DOJ’s suspicion of the company/individual and preclude the company/individual from receiving potential future benefits of co-operation if the DOJ takes enforcement action. It is more common for a company/individual to co-operate with a DOJ’s requests, as that positions the company/individual to receive a reduction in fines and or a reduced sentence, if the DOJ decides to take enforcement action.
In criminal investigations, the DOJ is bound by several confidentiality rules and restrictions. In particular, the DOJ may not disclose (with some limited exceptions) information and materials it receives pursuant to a grand jury subpoena under Rule 6(e) of the Federal Rules of Criminal Procedure, referred to as the Grand Jury Secrecy Rule. The Grand Jury Secrecy rule is a very strict rule of confidentiality, with limited exceptions. Given this, it is often difficult to convince the DOJ that certain information or material that is normally treated as confidential (eg, business secrets) should not be disclosed to it. That said, the DOJ is mindful of various confidentiality, privacy, and data protection restrictions, particularly for co-operating companies and individuals, and such issues should be discussed with the DOJ when producing materials during an investigation.
At the start of an investigation, it is typical for defence counsel to conduct a thorough internal investigation before raising any potential defences. It is also typical for defence counsel at least to co-operate in providing some document materials and other information in response to the DOJ’s requests. That said, defence counsel is typically free to raise defences with the DOJ at any point in the investigation. Further, if the DOJ decides to take enforcement action (eg, seek an indictment) against a client, defence counsel is typically provided with an opportunity to meet with the relevant management of the DOJ to present reasons why the DOJ should not take any such action.
In the US, the DOJ’s Leniency Program, sometimes referred to as the Amnesty Program, affords full immunity from prosecution when certain requirements are met. The core requirements for receiving full immunity are: (i) the applicant is the first to disclose the conduct to the DOJ, when the DOJ has not yet learned of the conduct (Type A leniency) or does not yet have enough information to pursue a conviction (Type B leniency), (ii) the applicant admits the conduct violated the antitrust laws, (iii) the applicant reports the misconduct fully and agrees to co-operate completely with the investigation, and (iv) the applicant immediately stops engaging in the conduct.
To start the process, the applicant will typically contact the DOJ to determine whether it will indeed be the first to report the misconduct, ie, whether leniency is still available. If leniency is available, the applicant will receive a “marker” to secure its place in line with the DOJ while investigating further whether a violation occurred. To obtain such a marker, counsel must report to the DOJ that they have some credible evidence of a criminal antitrust violation, identify the industry and client, and information about the general nature of misconduct. Upon obtaining a marker, the DOJ will expect that the applicant will come forward within a reasonable time to report fully on the conduct and meet the other requirements of leniency. This process is referred to as “perfecting the marker.” If an applicant “perfects” the marker, the DOJ will issue a “conditional leniency” letter, which gives the applicant full immunity on condition of meeting the co-operation obligations.
In addition to full immunity under the DOJ’s Leniency Program, the DOJ has an “Amnesty Plus” programme for companies involved in more than one cartel investigation. As part of this programme, a company under investigation for one cartel offence that discovers another potential cartel offence (eg, in a different product area) may receive immunity for the second offence and a substantial discount from any fines for the first offence.
Under the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA), a successful leniency applicant can qualify for a reduction in damages from treble to single, and avoid joint and several liability, if it provides satisfactory co-operation to the plaintiff in the civil class action antitrust case.
The DOJ may, and often does, seek information directly from a company’s employees. In the initial stages of an investigation, it is not uncommon for the DOJ (through FBI agents) to contact the current and former employees without any notice. It is important to issue guidelines to employees on how they could handle such situations. If the employee is represented by counsel, the government agents will need to direct their communications to counsel and not contact the employee directly. In the later stages of an investigation, it is common for the DOJ to request that employees sit for interviews or testify before a grand jury, particularly when a company is co-operating with the investigation. The DOJ makes these requests through counsel.
The investigation authority in the United States may seek documentary information directly from the target or others through search warrants or grand jury subpoenas. See section 2.11 Obligation to Produce Documents/Evidence Located in Other Jurisdictions.
In order to obtain information located abroad, the DOJ will typically serve a grand jury subpoena on a US subsidiary or affiliate of a non-US entity. A subpoena will request the documents in the control of the company, defined to include the non-US parent or affiliate of the US entity. As noted above, the DOJ maintains that those documents are within the scope of the subpoena even if they are located abroad. While the DOJ may not seek to enforce the subpoena as to foreign-located materials, it will request production voluntarily. The DOJ can also seek the assistance of the foreign government to obtain the documents through a co-operation agreement or a Mutual Legal Assistance Treaty (MLAT), as described in 2.11Obligation to Produce Documents/Evidence Located in Other Jurisdictions.
In the United States, the DOJ will often co-ordinate with other federal agencies to conduct cartel investigations, particularly when the conduct may have violated laws other than the antitrust laws (eg, securities or banking regulations, fraud, money laundering, tax violations or procurement regulations). It is not uncommon for the DOJ to conduct investigations jointly with other agencies in these situations or co-ordinate closely in their respective investigations. As examples only, the DOJ has co-ordinated in recent years in cartel investigations with the Securities and Exchange Commission, the Federal Reserve, the DOJ’s Civil Fraud Division, and the US military.
The DOJ will often co-ordinate with foreign enforcement authorities in cartel investigations as well. Notably, in January 2017, the DOJ published updates to the Antitrust Guidelines for International Enforcement and Cooperation, indicating the DOJ’s continued commitment for co-operation with foreign agencies. It is very common for the competition authorities to co-ordinate on many of the procedural aspects of a cartel investigation, including the timing of dawn raids/searches and timing of interviews of employees. The DOJ (and the foreign agencies) will often seek waivers of confidentiality from co-operating companies/individuals in an investigation to allow them to share information in more detail.
In the United States, the DOJ will seek an indictment from a grand jury to bring charges against a company or individual for a criminal antitrust cartel offence. The DOJ gathers information and evidentiary materials to present the case to the grand jury and the grand jury determines whether there is enough information to bring a charge against the company or individual. The grand jury generally consists of 16 to 23 members, and at least 12 jurors must concur in order to issue an indictment. Before presenting charges to a grand jury, the DOJ must first obtain approval from the Assistant Attorney General. After a grand jury issues an indictment the case is assigned to a federal district court.
In the United States, parties injured by antitrust cartel violations may sue for damages and/or injunctive relief by filing a complaint with a court. The complaint must contain allegations setting forth a factual basis for a claim. It is typical in the United States for civil complaints to follow immediately after a DOJ criminal investigation is disclosed. The parties will typically file the complaint in a federal district court, although some states allow for actions as well, under state antitrust laws. As noted, federal law mandates that private plaintiffs be direct purchasers in order to sue for damages, but many states’ laws also permit indirect purchasers to seek damages.
Criminal cartel prosecutions may be brought against multiple parties in a single proceeding if they participated in the same criminal cartel conduct constituting an offence or offences. It is common for the government to charge a company, affiliated entities, and executives in one indictment and seek one trial. That said, every criminal defendant has a right to request a separate trial if the joinder or consolidation of trial appears to prejudice the defendant.
In a criminal proceeding, the burden of proof is on the prosecution, and the prosecution must prove beyond a reasonable doubt that the defendant violated the antitrust laws. In a civil proceeding, the burden of proof is on the plaintiffs to establish by a preponderance of evidence that the defendant violated the antitrust laws.
A defendant has the right to a trial by jury in both criminal and civil trials, but may opt for a “bench trial” in which the judge is the trier of fact. The judge applies the law in all instances.
In the United States, it is often challenging for the DOJ to use evidence in one proceeding to prosecute a defendant in another proceeding. That said, defendants should be very cautious that any statements or other evidence produced in one proceeding could be used to impeach them in a subsequent proceeding.
In federal proceedings, the US Federal Rules of Evidence apply to legal proceedings involving criminal cartel enforcement and are applied by the judge.
In criminal cartel proceedings, economists and other experts typically play a minimal role. During an investigation, an expert or economist may play a role in calculating the affected volume of commerce of the conspiratorial conduct or provide insight into the industries involved. During sentencing or discussions of a resolution, an economist or financial analyst may have a role in determining a company’s ability to pay.
In civil cartel cases, experts play a more significant role at various stages of the proceeding. It is common for economic experts to submit reports and testimony relating to class certification, liability, and damages. For example, it is common in civil cartel cases for experts to analyse whether the plaintiff was (or was not) injured by the cartel and to quantify the plaintiff’s damages.
In US legal proceedings, the attorney-client privilege, work product doctrine, and the right against self-incrimination are most relevant. Please refer to 2.12Attorney-client Privilege and 2.13 Other Relevant Privileges.
It is possible for there to be multiple criminal and civil enforcement proceedings involving the same facts, particularly when multiple agencies are investigating the conduct for potential violations of laws they are mandated to enforce. In practice, it is common for a pending civil proceeding to be stayed until the conclusion of the criminal matter if the DOJ so requests (or to lag significantly behind as a result of the civil case being initiated after the criminal investigation).
The DOJ is the prosecuting agency for criminal cartel conduct in the United States. As mentioned in 1.1 Statutory Bases for Challenging Cartel Behaviour/Effects, various US states may also prosecute cartel conduct, but it is less common and sanctions tend to be less severe than under federal law. The DOJ does not have the authority to impose sanctions directly; only the courts may do so, even when a defendant pleads guilty. That said, when a defendant enters a guilty plea or is convicted, the DOJ will often submit a recommendation to the court on sentencing (ie, what “sanctions” to impose), which the court is free to accept (and often does in a plea context).
In the United States, it is possible for a company or individual to enter a plea (or otherwise settle an investigation) for cartel conduct. A company or individual may agree to plead guilty at nearly any stage of the investigation or prosecution, and those who plead guilty often agree with the DOJ to do so before the indictment has been returned by the grand jury. Notably, a court has the final say in whether to accept or reject a plea agreement. There are generally two types of plea agreements, type B and type C plea agreements. Simply, a type “B” plea agreement provides the court with discretion to modify certain terms of the plea agreement, such as the penalties negotiated, whereas a type “C” plea agreement generally only allows the court to accept or reject the agreement in its entirety. While type “C” plea agreements were once common in resolving cartel investigations, it is becoming more common for the DOJ and defendants to enter type “B” pleas.
There can be significant collateral consequences for being convicted of an antitrust cartel offence in the United States (including entering into a plea agreement). Perhaps most significantly, a conviction or guilty plea is prima facie evidence of a cartel violation in any follow-on civil case. Furthermore, if the conduct involves government contracts, it is not uncommon for convicted companies or their officers to be debarred from doing business with the government.
In the United States, the maximum statutory criminal penalties for antitrust cartel violations are USD100 million fine per offence for corporations, and ten years in prison and a USD1 million fine per offence for individuals. However, fines may be increased to twice the gross gain from the illegal conduct or twice the gross loss to the victims.
In criminal proceedings, the DOJ uses the US Federal Sentencing Guidelines to recommend penalties that courts impose on corporations and individuals convicted of a cartel violation. The US Federal Sentencing Guidelines considers a variety of factors for the recommended penalties, including the affected volume of commerce, prior criminal history, role in the offence, and co-operation with the investigation. While courts are not required to impose sentences within the ranges provided in the Guidelines, they must still consider the Sentencing Guidelines when imposing a sentence, in connection with a wider range of factors set forth in the US Federal Sentencing Statute (18 U.S.C. § 3553).
In civil proceedings, a private party may seek up to treble damages for the injury caused by the cartel conduct, as well as injunctive relief prohibiting any such conduct in the future.
An effective compliance programme can be a factor for prosecutors when determining whether to bring charges, negotiating a plea agreement, or considering appropriate criminal fines to a defendant. In the past, the DOJ has taken the view that, if a violation occurred, the company must not have had an effective compliance programme. The DOJ is contemplating changing this posture, and may provide compliance credit to companies with an effective compliance programme, in the absence of a violation. In more recent years, the DOJ has begun to credit companies for taking steps for improving their compliance programmes in deciding what to recommend for sentencing.
It is possible for a court to require restitution to consumers as part of a sentencing in a criminal case. Notably, the DOJ will often not recommend sentencing restitution to victims (consumers) when there is a civil action pending. Moreover, when a leniency applicant receives conditional leniency from the DOJ, one of the requirements of leniency is to make restitution with victims (consumers) when possible.
After the final adjudication of a criminal cartel trial, the defendant or the government may file a notice of appeal as to certain rulings. The notice of appeal must be filed within 30 days. Notably, a defendant who pleaded guilty waives his or her or its right to appeal.
An appeals court will generally review whether there was an error as a matter of law, opposed to a matter of fact. The appeals court will generally defer to the trial court’s finding of facts. A litigant that loses in the federal court of appeals may petition the US Supreme Court to hear the case, but reviews are rarely granted.
Private individuals and firms do have a private right of action to seek relief for injuries as a result of cartel conduct. Private plaintiffs may sue for damages as well as for injunctive relief under federal or state laws (including state statutes and common law). A private plaintiff must have standing, meaning that the plaintiff must show that it suffered antitrust injury that was proximately caused by the alleged cartel conduct and that can be redressed by a favourable decision. Private plaintiffs may bring the litigation in either federal or state courts.
It is common for private plaintiffs to file suit following the announcement of a criminal investigation. The prospect of recovering treble damages provides a significant economic incentive for private plaintiffs to file suit. Under the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA), a successful leniency applicant under the DOJ’s Leniency Program for criminal cartel enforcement may qualify for a reduction in damages from treble to single damages and avoid joint and several liability if it provides satisfactory co-operation to the private plaintiff(s).
Class actions are common in the United States. A class action is when a single plaintiff brings an action on behalf of a larger group of similarly situated parties. The case may proceed as a class action if certified by the court. To receive class certification, the named plaintiffs must establish that (i) the class members are so numerous that joinder of all members is impractical, (ii) questions of fact or law are common to the class, (iii) the claims or defences of the class representative are typical of the claims or defences of the class, and (iv) the class representative will fairly and adequately protect the interests of the class.
Indirect purchasers generally may not seek to recover damages under federal antitrust laws, with some limited exceptions, but may seek injunctive relief. This is known as the Illinois Brick doctrine, based on a Supreme Court case that confirmed the federal rule. However, indirect purchasers may seek damages under some state laws, known as Illinois Brick-repeal statutes.
If private plaintiffs receive evidence produced during a government investigation or proceeding, it can be used during a civil proceeding and will be admissible if it meets the rules of admissibility under the Federal Rules of Evidence. Notably, a final judgment in a government criminal proceeding will constitute prima facie evidence that a defendant has violated antitrust laws in a subsequent civil action.
It is very common for civil antitrust cartel litigation to settle prior to trial, particularly when the litigation follows a criminal investigation resolved by a plea agreement or jury conviction. While every private civil litigation is different, it is not uncommon for such litigation to last one to three years or, if not resolved by settlement, much longer (up to ten years in some instances).
The general rule in the United States for compensation of legal representatives is that each party pays its own attorney fees, regardless of the outcome of the litigation. However, there are some exceptions, such as contractual provisions and statutory provisions, as well as courts having discretion for awarding attorney fees from the losing defendant. In a class action settlement, the court must approve the amount of attorney fees that the plaintiffs’ attorneys will keep.
An unsuccessful claimant is not obliged to pay attorney fees to the successful defendant. However, the successful defendant may recoup certain costs from the claimant, such as fees for transcripts, witnesses, printing, court-appointed interpreters, etc, which are defined under Federal Rules of Civil Procedure Rule 54.
In a private civil litigation, any final decision is appealable to the appropriate court of appeals. Sometimes interim decisions, such as denials of motions to dismiss, are appealable under a process known as interlocutory appeal. The appeals court will conduct a review to ascertain whether there was an error in the application of the law and will generally defer to the trial court’s finding of facts.
There are no other items of information that are pertinent to an understanding of the process, scope and adjudication of claims involving alleged cartel conduct in the USA.
There are various publications, written by the enforcement agencies, for guidance related to cartel conduct. For additional information, please follow the links to the DOJ and/or FTC sites: