Global cartel fines are on track to come in at $2.4 billion this year – down from $7.8 billion last year.

That’s according to the preliminary findings of the 2017 Mid-Year Global Cartel Enforcement Report from Morgan Lewis.

“One thing we have seen this year is there are fewer large fines announced in the first six months of this year compared to recent years,” Morgan Lewis partner Clayton Everett told Corporate Crime Reporter in an interview last week. “Cartel enforcement had in the past been focused in the United States, Europe and a couple of other jurisdictions. In the last five years or so, we are seeing more and more countries seeing the value of a competitive economy and increasing their enforcement activity against international cartels.”

“There has been a proliferation of different enforcement agencies focusing on the same kind of conduct. Many of those countries have also adopted leniency programs. The leniency programs have been successful in Europe for the last 25 years or so.”

“That ironically has increased the level of enforcement at the country level, but it has potentially decreased the number of filings by leniency applicants in international cartel cases.”

Why would that be the case?

“It complicates the process of securing leniency,” Everett said. “It extends the period of time and the burden of complying with the leniency application and follow on class actions that in the past have been confined to the United States, but are now being filed in Europe and elsewhere.”

“The cost of going in for leniency has increased. The complexity of the process of securing leniency has increased. And there is some anecdotal evidence that that has resulted in fewer leniency applications being filed.”

Have you represented companies that have applied for leniency?

“I have.”

Isn’t there a way to do one stop shopping –  apply to all of the enforcement agencies at once for leniency?

“Unfortunately there is not. You need to file applications in any jurisdiction where you conclude that it’s important to seek leniency from the enforcement authority. But there is no centralized authority that can grant leniency for all of the jurisdictions.”

Who are the major players who can grant leniency?

“The United States and Europe would be on the list. Increasingly, you would have to consider China. Japan has historically been an important jurisdiction. And increasingly now Brazil, South Africa, and Australia. Any of the leading economies now have leniency programs and have been increasingly aggressive in pursuing criminal prosecutions of companies.”

Deferred and non prosecution agreements seem unusual in the antitrust criminal area. Why is that the case?

“Those are unusual in the antitrust context. It’s just a policy decision by the Antitrust Division. That’s not a resolution they will typically accept. The exceptions to that have been primarily in financial services because of some ancillary impacts of a guilty plea. But the Antitrust Division’s policy has historically been — they will accept a guilty plea, but not a deferred prosecution agreement.”

Why wouldn’t that policy apply equally effectively across the board in corporate crime cases?

“The policy at the Antitrust Division is driven in part by the fact that they have a fairly unusual leniency process and program. That’s the centerpiece of their criminal antitrust enforcement. The first company that self-identifies a problem and provides cooperation to the Department of Justice before the Department has sufficient evidence to bring a criminal case receives what they call leniency. But it is essentially complete immunity from prosecution. None of their executives are prosecuted individually. The company pays no fines.”

“That’s the carrot part of the Antitrust Division’s program. The stick part is if you don’t win that race to become the leniency applicant, the Antitrust Division will expect you to either plead guilty or to stand trial. I think it’s the Antitrust Division’s view that resolutions with deferred prosecution agreements just don’t fit with that program.”

If you go in for leniency, nobody ever finds out?

“The Department of Justice will never identify who has gone in for leniency. In some countries, the enforcement authorities will identify the leniency applicant. In other countries, it’s prohibited for the leniency applicant to self identify. But in the United States, it’s possible to limit the civil damages if the leniency applicant identifies itself to the plaintiffs and provides cooperation in some manner to the plaintiffs. If the company does want to take advantage of the damages limitation, the company would need to essentially service themselves.”

In your report, there is a discussion of whistleblowers and antitrust. How do whistleblowers play into antitrust enforcement?

“Whistleblowers in the United States have been a big source of antitrust investigations. There are laws that protect antitrust whistleblowers but they don’t offer them the kind of compensation that False Claims Act whistleblowers might get.”

It’s not a bounty per se.

“That’s right. But many other countries recently have adopted whistleblower programs both to protect whistleblowers but also to provide them incentives to identify problems. Some of those would operate more like the bounty system that exists for some violations in the United States. There seems to be a trend among enforcement authorities to try and utilize whistleblowers or to try to give them incentives to provide information to enforcement authorities in a way that wasn’t a big part of the fabric in the past.”

“The UK just passed a law that provides incentives up to one million pounds for whistleblowers. And the Competition and Markets Authority there has been advertising that extensively. Not a lot of whistleblower cases there yet, but the expectation is that there will start to be more in the future.”

If you are representing a company seeking leniency — that is a form of whistleblowing, isn’t it?

“It is identifying a violation the way that a whistleblower would. There are some parallels there. There are differences. In general, a whistleblower won’t face potential liability and damages actions whereas a leniency applicant would. There is no direct financial reward, a bounty type system, for a leniency applicant.”

Do you like the leniency program?

“It has been very successful. The Department of Justice over the last 25 years has developed most of their cartel cases through the leniency program. In that sense, it has produced positive results.”

Can it be a model for other corporate crime enforcement programs?

“I don’t know why it has largely been confined to antitrust. Antitrust crimes necessarily involve multiple actors. They are conspiracy crimes. It is one of the elements of the statute — there has to be a contract, combination or conspiracy. The leniency program makes sense in that context. It unearths conduct that allows prosecution of other companies, entities or individuals. That probably in general is not the case for other corporate crimes.”

Do you feel better about representing leniency applicants?

“There is always something I find in every case — whether with a leniency applicant or not — that motivates. There are always important issues where justice can be served.”

Is there any public report that documents the leniency applicants with names, dates and detailed information?

“I’m not aware of any such report.”

On the leniency front, let’s say there is a race to the Department of Justice between two companies. Does one get kicked out? It’s literally the first to get to the door?

“Yes. It’s a race to the door. Whoever gets there first, they get leniency. If you miss, even if it is by just a few minutes, you lose the opportunity for leniency. There may be opportunities for cooperation discounts and the like. But you lose the opportunity for the full leniency.”

Is there a phone number? Is there a door you knock on?

“It’s different in different jurisdictions. In the United States, you call someone within the Antitrust Division. There is a general number you can call. Or you can call any contact you have within the Antitrust Division. They have an internal process to elevate that to make sure that leniency is or is not available. They will tell you after they check. Through that process, they can time stamp things.”

“In some other jurisdictions, you have to fax in a request for leniency. That gets time stamped. Or there are telephone numbers that are set up with voice mail time stamps.”

Do you disclose the name of the company you are representing?

“In asking for what is called a marker, you do not necessarily need to identify the company. You do need to identify the industry or the product. In the initial request, it is not required to identify the company.”

[For the complete q/a format Interview with Clayton Everett, see 31 Corporate Crime Reporter 30(12), July 24, 2017, print edition only.]