Corporate criminal antitrust enforcement has been undermined by a Justice Department policy that was introduced in July 2019.

That’s the take of Columbia University Law Professor John Coffee in his new book Corporate Crime and Punishment: The Crisis of Underenforcement (Berrett Koehler Publishers, 2020). 

“Since 1993, the Antitrust Division had enforced a tough policy under which it would give no credit for corporate compliance plans in price-fixing and cartel cases,” Coffee writes. 

“Instead, to receive credit, the corporation had to turn itself in, disclose the identities of the other members of the cartel, and cooperate with the Antitrust Division in all respects.”

“Only the first corporation to turn itself in received any credit. The second such corporation could thus be very disappointed. But the benefit to the first corporation was substantial, as the first corporation and its employees would receive complete immunity if the corporation confessed before the government was hot on its trail. The result was to create a competition to snitch and inform.”

“This policy worked, and companies did use it, but it was resented within the business community,” Coffee writes. 

In July 2019, the Antitrust Division relaxed its policy, so now any member of this cartel or price-fixing conspiracy could receive a charging and sentencing credit if it had a credible compliance plan. 

“Complete immunity will still require that the corporation turn itself in, but even the ringleader of the conspiracy could escape with only a misdemeanor charge if it had a credible compliance plan – which, as usual, would have failed in this instance,” Coffee writes.

“One could pause here to assess whether excessive credit is being given to corporate compliance plans, which prosecutors have little ability to contest. But the bigger point is that the proven effectiveness of the Antitrust Division’s immunity-for-confession policy is now undercut.” 

“Hypothetically, if a corporation discovers today that it is a participant in a cartel or price-fixing conspiracy, it has multiple options: it can confess, it can rely on its compliance plan and possibly invest in making it appear more formidable, or it can persist and hope not to be caught. 

Some combination of rely on compliance and persist and hope not to be caught seems likely to predominate, Coffee concludes. 

“No longer must the corporation fear – at least to the same extent –  that a rival conspirator will confess before it does, because now that will only imply the loss of the difference between complete immunity and the sentencing and charging credit under the compliance plan.” 

“In the past, corporations turned themselves in to the Antitrust Division because it meant an all-or-nothing difference in the leniency that they received. In the future, the incentive to self-report will be diminished.”