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Navigating the Turbulent Waters of Cross-Border White Collar and Antitrust Issues (Part 2)

Further to our previous postThe Principles of Federal Prosecution of Business Organizations, by contrast, which the Criminal Division and the various United States Attorney’s offices employ to assess corporate liability and determine an appropriate resolution, speak more generally about corporate cooperation with respect to securing the cooperation of corporate executives. For example, Principle 9-28.700 provides that in “gauging the extent of the corporation’s cooperation, the prosecutor may consider, among other things, whether the corporation made a voluntary and timely disclosure, and the corporation’s willingness to provide relevant information and evidence and identify relevant actors within and outside the corporation, including senior executives.” The Principles identify different ways a corporation can cooperate beyond the mere disclosure of facts such as by making witnesses available for interviews. (Id. at 9 n.2.)

Given these differences in what cooperation means for different regulatory and enforcement agencies in the U.S., it is important for counsel representing corporate clients to assess the type of corporate liability their client is facing. If the corporate liability your company may be facing does not implicate antitrust concerns, you may have more leeway in terms of the type of cooperation you offer to DOJ, particularly with respect to the “corporate confession” by senior executives.

The panel discussion also highlighted the different enforcement priorities espoused by regulators and competition authorities around the globe with respect to the investigation and prosecution of individuals for financial fraud and cartel offenses. The Antitrust Division has long emphasized that the most effective way to deter and punish cartel activity is to hold culpable individuals accountable by charging them criminally and seeking jail sentences. In his remarks to the New York State Bar Association on January 30, 2014, Assistant Attorney General William Baer stated that “effective cartel administration requires holding accountable both corporations and the senior executives who orchestrate their unlawful conduct.” From 2008-2013, the Division charged 311 individuals with antitrust crimes. According to Denis J. McInerney, DOJ’s Criminal Division during his tenure focused similarly on prosecuting culpable individuals for their fraudulent conduct, demonstrated by the almost three dozen individuals who have been sentenced to prison terms of ten years or more since 2011.

Regulators and competition authorities abroad do not appear to place the same enforcement priority with respect to the prosecution of individuals. While the UK’s SFO has prosecuted individuals recently in connection with the LIBOR manipulation, it does not have the track record of individual prosecution as do the U.S. agencies. Although the European Commission has been an active enforcer of antitrust violations in the EU and has secured significant penalties for such violations, it does not prosecute individuals for cartel offenses. As I observed on the panel, however, the creation of the new Competition and Markets Authority (CMA) in the UK as of April 1, 2014, and its enhanced enforcement powers will likely increase the number of individual prosecutions for cartel offenses in the UK. Two of the most notable and significant revisions to the competition law regime in the UK are the removal of the “dishonesty” requirement from the UK’s criminal cartel offense and the new powers authorizing the CMA to compel individuals connected to a company (existing or former employees or anyone connected with a company) involved in a civil cartel investigation to answer oral and written questions (subject to their right against self-incrimination and certain other safeguards). Both of these significant reforms are likely to create more uncertainty for defense counsel representing individuals and corporations alleged to have participated in cross-border cartel offenses with respect to their clients’ exposure and the likelihood of criminal prosecution for their participation in such conduct. It remains to be seen whether the revisions to the elements and scope of a criminal cartel offense in the UK will capture innocuous conduct by individuals acting within the ordinary course of business and whether the removal of the dishonesty element has made the cartel offense a strict liability offense that is typically only applied to corporate liability.