CLPD SYMPOSIUM : LENIENCY Cartel leniency programs:   Caveats and Costs Mark Leddy Elaine Ewing Partner, Cleary Gottlieb Steen & Hamilton LLP Washington Associate, Cleary Gottlieb Steen & Hamilton LLP Washington i.e., the de- e.g. - - - - 1 Mark Leddy, “Cartel leniency programs – Some caveats,” Concurrences: Revue des droits de la concurrence (September 2011), available at http://www.concurrences.com/Journal/Issues/No-3-2011/ Cartel-leniency-programs-Some. 2 A European colleague of ours remarked that certain lawyers in the EU are in effect reverting to the old “Form AB” system (terminated in 2004) where companies could explain their conduct to the Commission in the “Form AB” and be protected from action of the Commission until the Commission took a view on the conduct. This incentivized counsel and companies to file “protective” forms to insulate their conduct from challenge. Many of the applications were never acted upon. COMPETITION LAW & POLICY DEBATE | VOLUME 1 | ISSUE 4 | NOVEMBER 2015 29 . SYMPOSIUM : LENIENCY - - 8 - - - 3 “Amnesty plus” allows a company that is under investigation in one product (“Product A”) to report its involvement in a conspiracy relating to a second product (“Product B”), thereby securing leniency in Product B and also securing an additional discount on a fine in Product A. See Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement, U.S. Department of Justice, Antitrust Division, Frequently Asked Questions Regarding the Antitrust Division’s Leniency Program (Nov.

19, 2008), available at http://www. justice.gov/atr/frequently-asked-questions-regarding-antitrust-divisions-leniency-program. 30 4 China Fines 12 Japanese Auto-parts Companies 1.24 Billion Yuan for Price Fixing, MLex (Aug. 20, 2014, 4:07 AM), http://www.mlex.com/ GlobalAntitrust/DetailView.aspx?cid=578331&siteid=202&rdir=1. Press reports indicate that China’s auto parts investigation is expanding. China’s NDRC Expands Antitrust Probe Into New Categories of Auto-parts, MLex (Nov.

26, 2014), http://www.mlex.com/GlobalAntitrust/DetailView.aspx?cid=613653&siteid=202&rdir=1. 5 Press Release, Japan Fair Trade Commission, JFTC Issued Cease and Desist Orders and Surcharge Payment Orders Against Bearing Manufacturers (Mar. 29, 2013), available at http://www.jftc.go.jp/ en/pressreleases/yearly-2013/march/130329_2.html. 6 Strict Sanctions Against International Cartel Activities by Global Bearing Suppliers That Continued for Longest Period of Time in History, Korea Fair Trade Commission, International Cartel Division (Nov. 17, 2014), available at http://eng.ftc.go.kr/bbsadm/download.jsp?file_ name1=/files/bbs/2014/&file_name2=Sanctions%20against%20 Global%20Bearing%20suppliers.PDF. 7 Seventh Guilty Plea in Competition Bureau’s Investigation Involving Motor Vehicle Components, MLex (Dec.

11, 2014, 12:52 PM), available at http://www.mlex.com/US/Content.aspx?ID=619144. 8 Media Release, CCS Imposes Penalties on Ball Bearings Manufacturers Involved in International Cartel, Competition Commission of Singapore (May 27, 2014), https://www.ccs.gov.sg/media-and-publications/media-releases/ccs-imposes-penalties-on-ball-bearings-manufacturers-involved-in-international-cartel. 9 Press Release, Australian Competition & Consumer Commission, $3 Million Penalty for Bearings Cartel Conduct (May 31, 2014), http://www.accc.gov.au/media-release/3-million-penalty-for-bearings-cartel-conduct. 10 CADE’s General Superintendence Investigates Cartel in Antifriction Bearings Market, Conselho Administrativo de Defesa Econõmica (Oct. 10, 2014), http://www.cade.gov.br/Default.aspx?1124f2061ff40b08123f10263a00. 11 CADE’s General Superintendence Investigates Cartel in the Market of Safety Devices for Vehicles, Conselho Administrativo de Defesa Econõmica (July 6, 2015), http://www.cade.gov.br/Default.aspx?bc70be4adb31c74bdf6dfe53ed51; CADE Starts Proceeding Against Alleged Automotive Shock Absorbers Cartel, PaRR (Oct. 1, 2015), http://app.parr-global.com/intelligence/view/1310099. COMPETITION LAW & POLICY DEBATE | VOLUME 1 | ISSUE 4 | NOVEMBER 2015 . SYMPOSIUM : LENIENCY Cartel leniency programs: Caveats and Costs - - 12 Media Release, South Africa Competition Commission, Competition Commission Probes Collusive Conduct in Automotive Industry (Oct. 13, 2014), available at http://www.compcom.co.za/wp-content/uploads/2014/09/Competition-Commission-probes-collusive-conduct-in-automotive-industry.pdf. 13 Press Release, U.S. Department of Justice, Antitrust Division, Third Company Agrees to Plead Guilty to Price Fixing on Ocean Shipping Services for Cars and Trucks (Dec. 29, 2014), available at http:// www.justice.gov/opa/pr/third-company-agrees-plead-guilty-pricefixing-ocean-shipping-services-cars-and-trucks. 14 Jeff Sistrunk, Japan Fines Car Shippers $223M for Price-Fixing, Law360 (March 19, 2014, 4:25 PM), available at http://www.law360.com/articles/519608/japan-fines-car-shippers-223m-for-price-fixing; Press Release, Japan Fair Trade Commission, The JFTC Issued Cease and Desist Orders and Surcharge Payment Orders Against International Ocean Shipping Companies (Mar.

18, 2014), available at http://www. jftc.go.jp/en/pressreleases/yearly-2014/March/140318.html. 15 A Group of Global Shipping Companies Targeted by USD 75m Fine Pursued by Chile’s Antitrust Regulator, PaRR (Feb. 3, 2015), http://app. parr-global.com/intelligence/view/1215246. 16 Matthew Bultman, S. Africa Fines Japanese Shipper $8.5M For Price-Fixing, Law360 (July 1, 2015, 2:41 PM), available at http://www. law360.com/articles/674691/s-africa-fines-japanese-shipper-8-5mfor-price-fixing. 17 WWL Seeks Leniency from China’s NDRC for Cargo Shipping Cartel, MLex (June 19, 2015 8:42 AM), http://www.mlex.com/GlobalAntitrust/DetailView.aspx?cid=691356&siteid=202&rdir=1; Japanese Shipping Company Applied for Leniency to China’s NDRC Over Price Fixing, MLex (Feb.

9, 2015, 8:14 AM), http://www.mlex.com/GlobalAntitrust/DetailView.aspx?cid=642952&siteid=202&rdir=1. 18 Press Release, U.S. Department of Justice, Antitrust Division, NEC Tokin Corporation to Plead Guilty and Pay $13.8 Million for Fixing Price of Electrolytic Capacitors (Sept. 2, 2015), available at http:// www.justice.gov/opa/pr/nec-tokin-corporation-plead-guilty-andpay-138-million-fixing-price-electrolytic-capacitors. 19 NDRC Confirms Antitrust Probes Into Capacitors, Auto Parts, and OTA Companies, MLex (July 2, 2014, 8:10 AM), http://www.mlex.com/ GlobalAntitrust/DetailView.aspx?cid=555390&siteid=202&rdir=1; Comment: Japanese Raids Put More Pressure on Global Capacitors Cartel, MLex (June 24, 2014, 5:26 PM) http://www.mlex.com/ GlobalAntitrust/DetailView.aspx?cid=552121&siteid=190&rdir=1; Superintendent Opens Process to Determine International Cartel in the Capacitor Market, Conselho Administrativo de Defesa Econõmica (December 2, 2014), http://ftp.cade.gov.br/Imprimir.aspx?Conteudo=2277. Indeed, - - i.e. - 20 David Vascott, Spratling: Leniency Programmes May Be a Victim of Their Own Success, Global Competition Review (Mar.

25, 2013), available at http://globalcompetitionreview.com/news/article/33304/ spratling-leniency-programmes-may-victim-own-success/. 21 Id. 22 Brent C. Snyder, Deputy Assistant Attorney General for Criminal Enforcement, U.S. Department of Justice, Antitrust Division, Remarks at the Sixth Annual Chicago Forum on International Antitrust (June 8, 2015), available at http://www.justice.gov/opa/speech/ deputy-assistant-attorney-general-brent-snyder-delivers-remarks-sixth-annual-chicago. COMPETITION LAW & POLICY DEBATE | VOLUME 1 | ISSUE 4 | NOVEMBER 2015 31 .

SYMPOSIUM : LENIENCY - i.e. - can reduce the - - - - - - 23 Id. 32 24 See Organization for Economic Co-operation and Development (OECD), Use of Markers in Leniency Programs (Dec. 16, 2014), available at http://ec.europa.eu/competition/international/ multilateral/2014_dec_leniency_programs_en.pdf; Brazil’s CADE Negotiating Leniency Agreements With Auto Parts Makers, PaRR (Dec. 11, 2013), http://app.parr-global.com/intelligence/view/1049129; Canadian Competition Bureau, Immunity Program: Frequently Asked Questions, Step 1: Requesting an Immunity Marker (Sept. 25, 2013), available at http://www.competitionbureau.gc.ca/eic/site/cb-bc. nsf/eng/03594.html; The Office of Fair Trading (OFT), Applications for Leniency and No-action in Cartel Cases: OFT’s Detailed Guidance on the Principles and Process (July 2013), available at https://www. gov.uk/government/uploads/system/uploads/attachment_data/ file/284417/OFT1495.pdf. COMPETITION LAW & POLICY DEBATE | VOLUME 1 | ISSUE 4 | NOVEMBER 2015 . SYMPOSIUM : LENIENCY Cartel leniency programs: Caveats and Costs - - - 25 Leah Nylen, One in Three Leniency Applicants Drop Their Marker, DOJ Official Says, MLex (June 7, 2012, 5:00 PM), http://www.mlex.com/ US/Content.aspx?ID=245815. The gap between the number of leniency applications and prosecutions is not limited to the United States, where the criminal prosecution of companies and individuals might provide a greater incentive for marker filings. Data from other jurisdictions show that many companies apply for leniency for conduct in markets where no one is ultimately prosecuted. For example, in 2014 the JFTC reported 50 leniency applications but only 12 cartel decisions; in 2013 the agency reported 102 leniency applications but only 14 cartel decisions.

Rating Enforcement 2015: Japan’s Fair Trade Commission, Global Competition Review (June 16, 2015), available at http://globalcompetitionreview.com/surveys/article/38861/japans-fair-trade-commission; Rating Enforcement 2014: Japan’s Fair Trade Commission, Global Competition Review (May 29, 2014), available at http://globalcompetitionreview.com/surveys/ article/36069/japans-fair-trade-commission. Even after accounting for the possible lag between a leniency application and an enforcement action, this suggests that a large majority of leniency applications never result in prosecution. COMPETITION LAW & POLICY DEBATE | VOLUME 1 | ISSUE 4 | NOVEMBER 2015 33 .