Antitrust Crimes
The 54th Annual
American Bar Association
Section of Antitrust Law
Spring Meeting
"Measuring the Value of Second-In
Cooperation in Corporate Plea Negotiations"
Address by:
SCOTT D. HAMMOND
Deputy Assistant Attorney General
for Criminal Enforcement
Antitrust Division
U.S. Department of Justice
Washington, D.C.
March 29, 2006
Measuring the Value of Second-In Cooperation in
Corporate Plea Negotiations
I. Introduction
The rewards for admission into the Division's Corporate Leniency
Program to the first qualifying company to come forward and report a
cartel offense have been much touted. (1) While the top prize is
reserved for the amnesty applicant, a company that moves quickly to
secure its place as "second in the door" and provides valuable
cooperation can also reap substantial benefits. This paper discusses
the rewards and incentives available for "second-in" companies that
approach the Division after the opportunity for amnesty has passed.
A key component in the success of the Division's cartel
enforcement program, particularly the Corporate Leniency Program, is
transparency and predictability. Specifically, companies and their
executives must be able to predict with a high degree of certainty
the rewards if they self report and cooperate, and the consequences
if they do not. With leniency, the rewards for the company and its
qualifying employees - no criminal convictions, no criminal fines,
and no jail sentences - are as predictable as they are
extraordinary.
The rewards for second-in companies are not as uniform, because
the value of a second-in company's cooperation can vary dramatically
from case to case. While a second-in company's cooperation typically
will significantly advance an investigation, there are times when
the cooperation is either cumulative or no longer needed. For
example, second-in cooperation likely would more significantly
advance an investigation of a five-firm conspiracy than a two-firm
conspiracy. Second-in cooperation could come at the outset of an
investigation when the Division is still developing key evidence
against others, or after significant evidence already has been
provided through an amnesty applicant or a successful covert
investigation complete with consensual monitoring and coordinated
search warrants. The second-in company's cooperation could include
self reporting on previously unidentified cartels warranting
"Amnesty Plus" credit, (2) or be limited to conduct already
detected. The second-in company could offer its cooperation
immediately after learning of the existence of the investigation, or
only after it receives a target letter or after it has been
indicted.
If the Division were to establish an absolute, fixed discount for
second-ins without consideration of these types of variables, then
the need for proportionality would be sacrificed for increased
transparency. Proportional treatment also often requires
consideration of factors shared only with the sentencing court and
not the public, factors such as the state of the investigation at
the time of the cooperation, the nature and extent to which the
cooperation advanced the investigation, and whether the cooperation
earned Amnesty Plus credit for disclosing undetected cartel
offenses. The Division carefully weighs all of these variables in
measuring the value of a company's cooperation to ensure
proportional treatment of cooperating parties across all Division
matters.
This paper hopefully will provide more transparency as to the
potential rewards and incentives available for second-in companies
and the factors considered in determining the size of the
cooperation discount. The paper focuses on the benefits earned by
Crompton Corporation for being second-in-the-door in the Division's
rubber chemicals investigation and provides information that was not
public at the time the company was sentenced. (3) Crompton
represents one end of the spectrum -- a company that provided
exemplary cooperation and, in return, received an extraordinary 59%
discount off its minimum Guidelines criminal fine, representing a
more than $70 million reduction in its fine. Of course, the risk for
the Division in selecting this example is that other companies may
come forward and claim that they deserve the same percentage
reduction received by Crompton. However, as described below, the bar
was set very high in the Crompton case. Any company that hopes to
match or even approach Crompton's discount will have to earn it.
II. Potential Rewards for Second-In Cooperation
A. Reward #1: Reducing The Scope Of Affected Commerce Used
To Calculate A Company's Guidelines Fine Range
One significant benefit a second-in company may receive actually
comes before - and may turn out to be even more valuable than - the
calculation of the cooperation discount off its Guidelines fine
range. (4) If a company's cooperation pursuant to a plea agreement
reveals that the suspected conspiracy was broader than had been
previously identified - either in terms of the length of the scheme
or the products, contracts or commerce affected - then the
Division's practice is not to use that self-incriminating
information in determining the applicable Guidelines range, except
as provided in Section 1B1.8(b) of the U.S. Sentencing Guidelines.
(5) It is not uncommon for a second-in corporate defendant to have
its fine drastically reduced on this basis. For example, an amnesty
applicant may not have evidence of the origins or the full scope of
a cartel because it joined an ongoing conspiracy, it was only a
peripheral player, or its executives who participated in the
cartel's formation are no longer employed by, or available to, the
applicant. Under any of these scenarios, a second-in company with
information that expands the scope of the cartel would not only
receive a substantial cooperation discount below the minimum
Guidelines fine, but also the company's volume of affected commerce
for cartel activity previously unknown to the Division would not be
included in the defendant's Guidelines fine calculation. There are
numerous examples of corporate defendants that have benefited
greatly by providing timely cooperation and qualifying for this §
1B1.8(b) credit. (6)
The Division's practice in this area is particularly generous in
light of two considerations. First, the Division is not required to
restrict the use of self-incriminating information in calculating a
defendant's applicable Guidelines fine range, unless it binds itself
as part of a plea/cooperation agreement. As noted above, however,
the Division's practice is to agree to such language in its plea
agreements as an additional inducement for companies to cooperate
fully. Second, U.S.S.G. § 1B1.8(b)(5) and its corresponding
Application Note 1 make clear that a defendant who qualifies for §
1B1.8 credit may not be entitled to a "double dip" by also obtaining
a departure based on substantial assistance. (7) While the
Guidelines grant sentencing courts discretion to refuse to depart,
the Division has routinely recommended that companies that qualify
for § 1B1.8 credit also receive downward departures, and there are
no examples where a court has failed to accept the government's
recommendation to grant a downward departure on this basis.
B. Reward #2: Obtaining A Substantial Cooperation Discount
The reward to second-in companies for timely cooperation that
undergoes the most scrutiny is the amount of the fine reduction.
Second-in companies that provide cooperation that substantially
advances an investigation can expect to receive a plea agreement
that recommends a substantial assistance departure pursuant to
U.S.S.G. § 8C4.1 and a fine below the minimum Guidelines range. The
amount of the recommended departure -- often referred to as the
"cooperation discount" -- is measured as a percentage and reflects
the overall value of the cooperation provided. As discussed below,
the cooperation discount is applied to a specific point within the
Guidelines range. Cooperation discounts for second-in companies are,
on average, in the range of 30% to 35% off of the bottom of the
Guidelines fine range. (8) Subsequent cooperators may still qualify
for a cooperation discount below the Guidelines minimum if they
provide substantial assistance. However, their cooperation discount
will be lower, often substantially lower, than the second-in
company, unless the company's cooperation includes the disclosure of
undetected violations that warrant extraordinary Amnesty Plus
credit. (9)
Section III below discusses the key factors that the Division
considers when measuring and assessing a company's cooperation
discount and looks at how these factors were applied in the Crompton
case.
C. Reward #3: Securing A Low Starting Point For Application
Of The Cooperation Discount
As noted above, the cooperation discount is applied to a specific
point within the Guidelines sentencing range. Except in a few
situations that are described below, the cooperation discount
starting point for a number-two company is the minimum Guidelines
fine. This reward for early cooperators can be extremely valuable.
Subsequent cooperating companies that come forward after the
second-in company may face a cooperation discount starting point
well above the minimum Guidelines fine. Some may encounter
cooperation starting points as high as the middle to the top of the
Guidelines range, depending on how late the company is to accept
responsibility.
In the case of Crompton, its Guidelines fine range was between
$121 and $242 million. Crompton's cooperation discount of 59% was
applied to the minimum Guideline fine of $121 million, resulting in
a fine of $50 million. Therefore, before even applying the 59%
cooperation discount, Crompton benefited from having the minimum
Guidelines fine as its cooperation discount starting point. For
example, if Crompton's cooperation starting point had been at the
middle of the range ($181 million) and its cooperation discount
remained the same, Crompton would have faced a fine of $75 million.
There are two principal situations in which the cooperation
discount for a second-in company will not be applied to the minimum
Guidelines fine. The first situation is where the company had a
significant leadership role in the conspiracy. The company's role in
the offense will result in a sentencing enhancement, much like
high-level, culpable
individuals face at sentencing. The U.S. Sentencing Guidelines
specifically recognize this factor, particularly in antitrust
offenses, (10) and the Division has applied it in calculating
corporate fines. For example, an organization with significant
market power that organizes and coordinates collusive activities
with its smaller competitors should expect to get this bump. The
Division, however, recognizes the difference between a significant
leadership role and the more common situations in which multiple
players each have equally important roles in coordinating and
implementing illegal agreements; in the latter situations, no upward
adjustment is warranted.
The other situation is "Penalty Plus." The Division's Penalty
Plus program is the flip side of its Amnesty Plus program.
(11) As
discussed more fully below, Amnesty Plus induces companies that are
already under investigation by the Division to clean house and
report violations in other markets where they compete. Companies
that elect not to take advantage of the Amnesty Plus opportunity
risk harsh consequences. If a company fails to discover and report
the second offense, and then later finds itself negotiating a plea
after the conduct is discovered by the Division, then it should
expect to receive a cooperation discount starting point at least as
high as the midpoint of the Guidelines range for the second offense.
If the Division learns that the company discovered the second
offense and simply decided not to report it when it had a chance to
qualify for Amnesty Plus credit, then the sentencing consequences
will be even more severe. In that case, if the conduct is discovered
and successfully prosecuted, the Division's policy is to urge the
sentencing court to consider the company's and any culpable executives' failure to report the conduct voluntarily as an
aggravating sentencing factor. We will request that the court impose
a term and conditions of probation for the company pursuant to
U.S.S.G. § 8D1.1 - § 8D1.4, and we will pursue a fine or jail
sentence at or above the upper end of the Guidelines range. In
addition to the considerations above, where a corporate defendant
has a prior criminal history, its culpability score may be increased
resulting in a higher Guidelines fine range. (12)
D. Reward #4: Securing More Favorable Treatment For Culpable
Executives
Second-in companies that move quickly to cooperate also have an
opportunity to minimize the number of individual employees who are
subject to prosecution and maximize the opportunity for those
culpable executives that are subject to prosecution to receive
favorable plea resolutions. Most corporate plea agreements provide a
non-prosecution agreement for company employees who cooperate fully
in the investigation. Yet certain culpable employees, employees who
refuse to cooperate, and employees against whom the Division is
still developing evidence may not receive any protection under the
company plea agreement. These individuals are often referred to as
"carve outs," meaning they are excluded (or "carved out") of the
company deal. Culpable carve outs must negotiate separate plea
agreements or face indictment. Most companies place a high value on
minimizing the number of carve outs. (13)
Second-in companies that cooperate early in an investigation
often have the advantage of being able to offer new and significant
evidence through multiple employees. When this is the case, the
Division will typically carve out only the highest-level culpable
individuals as well as any employees who refuse to cooperate; mid-
to lower-level employees who provide significant evidence furthering
the investigation will be offered non-prosecution protection under
the corporate plea agreement. In addition, those employees who are
carved out often are able to negotiate more favorable deals because
they are in a position to offer valuable cooperation early on in an
investigation.
In Crompton, three high-level employees were carved out of the
corporate plea agreement. (14) Subordinates of these carve-outs who
engaged in illegal conduct, however, received full protection as
part of the company plea in return for their cooperation. In
comparison, Bayer AG, the number-three company in the rubber
chemicals investigation, had five high- and mid-level individuals
carved out of its corporate plea agreement. (15) Similarly in the
Division's DRAM investigation, second-in Infineon had four
individuals carved out of its plea agreement, (16) while third-in Hynix had five carve outs
(17) and fourth-in Samsung had seven.
(18)
E. Reward #5 : Increasing The Likelihood That A Company Will
Qualify For Amnesty Plus Credit
Here is a remarkable statistic: roughly half of the Division's
current international cartel investigations were initiated by
evidence obtained as a result of an investigation of a completely
separate market. Most of the corporate defendants in international
cartel cases are multinational companies selling hundreds of
different products. It will come as no surprise then to learn that
the Division's experience is that if a company is fixing prices in
one market, the chances are good that it is doing so in other
markets as well. If an executive readily meets with competitors to
allocate customers, then he or she has likely done it before in his
or her career. And, if you go back further in time, you will likely
find a mentor who taught the colluding executive the tricks of the
trade. Armed with this experience, the Division has had great
success engaging in a strategy of "cartel profiling" techniques
aimed at ferreting out violations that sprout "cartel trees" --
where one investigation will eventually give root to prosecutions in
a half-dozen or more different markets. (19)
The Division's success in rolling one investigation into another
is well known within the antitrust bar and business community.
Companies understand that they cannot afford to remain blissfully
ignorant by limiting the scope of their internal investigation. Nor,
can they hunker down and hope for the best if their internal
investigation reveals antitrust violations in other markets before
it is detected by the Division. The risks and the consequences to
the company and its executives are too great. Instead, companies are
taking advantage of the Division's Amnesty Plus Policy, which
provides for more lenient treatment in an ongoing investigation when
a cooperating company discovers an unrelated antitrust violation and
reports it to the Division.
As the name suggests, the rewards for Amnesty Plus are twofold.
The cooperating company not only receives the benefits of full
amnesty in the uncovered offense, but also receives a substantial
additional discount in its fine for its participation in the first
conspiracy. The size of the additional discount depends on a number
of factors, including: (1) the strength of the evidence provided by
the cooperating company in the amnesty product; (2) the potential
significance of the uncovered case, measured in such terms as the
volume of commerce involved, the geographic scope, and the number of
co-conspirator companies and individuals; and (3) the likelihood the
Division would have uncovered the cartel absent the self reporting,
i.e., if there is little or no overlap in the corporate participants
and/or the culpable executives involved in the original cartel under
investigation and the Amnesty Plus matter, then the credit for the
disclosure will be greater. (20)
The main beneficiaries of the Amnesty Plus program have been
second-in companies that are quick to clean house to determine
whether they have antitrust exposure in other markets where they
might qualify for Amnesty Plus credit. Crompton is a prime example
of a company whose independent board of directors decided to leave
no stone unturned in its commitment to investigate, identify and
report antitrust violations after the rubber chemical investigation
commenced. As discussed below, the board's strategy resulted in the
company receiving an extraordinary reduction in its rubber chemicals
fine, and it also allowed the company to win the race for amnesty --
thereby securing nonprosecution protection for the company and its
employees -- on multiple additional products that have already
resulted in substantial penalties against co-conspirators.
F. Reward #6: Qualifying As A Candidate For Affirmative
Amnesty
As noted above, when the Division is investigating suspected
international cartel conduct in one market, the chances are about
even that it will lead to the Division opening up an investigation
into cartel conduct in a second, unrelated market. Sometimes, the
second-in company detects it before we do and qualifies for Amnesty
Plus credit. Other times, the Division discovers it first. When the
Division uncovers it first, staff may elect to approach one of the
subject companies with information about the suspected cartel and
provide it with an opportunity to cooperate in the covert
investigation in return for amnesty. This strategy, known as
"affirmative amnesty," gives the amnesty candidate a head start in
the race for amnesty when its competitors will not even be aware
that the gun has sounded. In return, the Division seeks cooperation
from an insider who will expose the inner-workings of the cartel.
The Division is very circumspect in its application of the
affirmative amnesty strategy. Once the Division discloses the
existence of the investigation to the affirmative amnesty candidate,
it runs the risk that word of the investigation will leak to the
other subjects, thereby losing the element of surprise and
jeopardizing the preservation of documents and testimony.
Notwithstanding the heightened risk of obstructive conduct, the
Division has successfully employed this strategy on a number of
occasions by targeting companies -- usually publicly-owned
multinational companies -- that have already established their bona
fides by accepting responsibility, cleaning house, and offering full
and timely cooperation on other Division criminal matters.
Typically, only companies that have obtained amnesty, amnesty plus,
or second-in cooperation status would warrant consideration as a
candidate for affirmative amnesty.
III. Calculating the Cooperation Discount Percentage: The Crompton Case
Turning to the calculation of the cooperation discount, three key
factors largely determine the size of the discount. Those factors
are (1) the timing of the cooperation; (2) the value and
significance of the information provided; and (3) whether the
company brings forward evidence of other collusive activity and
receives an additional Amnesty Plus discount.
A. Timing of Cooperation
The old adage, "timing is everything," certainly applies to the
value the Division will place on a company's offer to cooperate. It
is not enough to accept responsibility and pledge cooperation to
obtain the benefits outlined in this paper, the cooperation must
come at a time when it will substantially advance the investigation.
The Division typically places a premium on getting the first
plea/cooperation agreement to spark the investigation and to put
pressure on other companies to accept responsibility. Those
companies who belatedly offer their cooperation only after learning
that a co-conspirator has offered to plead and cooperate will find
the Division taking a much harder line in plea negotiations. The
Division's practice is to give the second-in company a significantly
better cooperation discount than the third company. While the gap
between the second and third companies may not be as stark as it is
between the amnesty applicant and the second-in, it is typically
greater than it is between the third and the fourth company, and so
on.
The need for speed clearly was not lost on Crompton's counsel or
its board of directors. Within days of first learning of the
investigation, Crompton's counsel met with Division staff, admitted
responsibility for its activities in the rubber chemicals conspiracy
and provided a proffer outlining the preliminary findings of its
internal investigation. Crompton promptly identified for staff key
documents relating to activities under investigation and provided
extensive attorney proffers based on internal interviews and its own
document review. The company also provided an overview of additional
areas of its internal investigation to be conducted. Crompton's
early cooperation allowed the Division to conserve and focus its
resources and to immediately put additional pressure on other
subject companies and individuals to cooperate.
Crompton's cooperation also highlights an issue related to the
sequence of when cooperation begins to take place. Specifically,
when does the company begin to provide meaningful cooperation,
including access to relevant information, documents, and witnesses?
Does a company provide access to key evidence uncovered in its
internal investigation before a disposition has been agreed upon
with the Division, or wait and hold onto the evidence until the last
"t" is crossed in hopes of using it as leverage to negotiate a more
favorable plea agreement? We encounter both strategies, although we
naturally encourage and will reward companies that provide early and
full access to their evidence. Companies that wait too long in
holding onto their evidence as a bargaining tool also run the risk
that the value of the evidence will decrease over time as the
investigation continues.
B. The Significance Of Evidence Provided In The Ongoing
Investigation
To receive a substantial discount, a cooperating company must
provide evidence, wherever located, of the illegal activity under
investigation. This evidence can come through witnesses, documents,
and other information. In the case of Crompton, key documents and
witness proffers were provided initially to the Division. Later,
certain Crompton employees with knowledge of conspiratorial activity
who had been identified by the company were offered full protection
through the company deal and interviewed by the Division.
Invariably, companies like Crompton that are able to provide
significant evidence to the Division also conduct very thorough
internal investigations utilizing a variety of investigative methods
to locate, preserve, and produce relevant evidence. Only after a
company has demonstrated that it has committed significant resources
to locating and preserving potentially relevant evidence, documents,
and witnesses, wherever located worldwide, will the Division be
fully satisfied that all potentially relevant evidence has been
produced.
Crompton's efforts to quickly locate and preserve evidence at the
start of the rubber chemicals investigation were exemplary. Within
hours of learning of the investigation, Crompton secured a massive
amount of documents that were considered relevant or possibly
relevant to the Division's investigation. Some of these documents
were identified by Crompton to the Division as soon as the first
meeting with Division staff. Crompton, with operations worldwide,
also immediately searched for and secured foreign-located documents
possibly relevant to the investigation. The company went so far as
to conduct simultaneous raids of two of it own foreign offices and
the office of a joint venture it was involved in to ensure the
preservation of relevant and probative documents. In the end,
Crompton produced more than 500,000 documents _ in both electronic
and paper form _ and more than thirty witnesses. The evidence
implicated not only other entities, but its own executives carved
out of the company deal.
In the rubber chemicals investigation, the Crompton plea
agreement was followed by plea agreements with Bayer AG,
(21) former Crompton executives Joseph Eisenberg and James Conway, and two
former Bayer AG executives, Martin Petersen and Wolfgang Koch, and
indictments against two additional former Bayer AG executives,
Gunter Monn and Jurgen Ick. Bayer AG was sentenced to pay a $66
million fine for its participation in the rubber chemicals cartel.
As noted above, Petersen and Koch were sentenced to four month jail
terms. Eisenberg and Conway are awaiting sentencing, and Ick and
Monn are international fugitives. (22)
C. Amnesty Plus
The final factor that the Division will consider when measuring
the value of a company's cooperation is whether it disclosed any
previously undetected antitrust offenses so as to warrant Amnesty
Plus credit. The Crompton case is a prime example of how both the
Division and the company under investigation can benefit from this
program.
At the start of the rubber chemicals investigation, Crompton
immediately launched a company-wide probe to identify any
potentially collusive activities involving other products. Its
internal investigation eventually led to amnesty applications in
four other product areas _ ethylene propylene diene monomers (EPDM);
heat stabilizers; acrylonitrile-butadiene rubber (NBR); and
polyester polyols _ with combined annual U.S. sales in the hundreds
of millions. (23) All four investigations are currently active, and
the Division is getting results. The NBR investigation already has
resulted in cases filed again Bayer AG and Zeon Chemicals and fines
more than $15 million. The polyester polyols investigation has
resulted in a fine of $33 million against Bayer Corporation. More
cases are expected from these investigations. Attached at the end of
this paper is a chart showing the convictions to date of cases
resulting from Amnesty Plus leads initiated by Crompton's
cooperation.
IV. Conclusion
Although the rewards for being first in the door and receiving
amnesty can't be beat, a second-in company also receives significant
rewards in reduced fines and more favorable treatment of its
culpable executives if the company offers timely and substantial
cooperation against remaining subjects in an investigation. To
maximize the rewards, however, the company must act quickly and
approach the Division as early as possible in the investigation and
be prepared to leave no stone unturned in its effort to cooperate
with the Division. Evidence, wherever located, must be quickly
located, preserved and provided to the Division as soon as possible.
The cooperation rewards are even greater (and the future risk of
penalty-plus minimized) if the company thoroughly cleans house and
takes advantage of the Division's Amnesty Plus program by providing
evidence of other cartel activity. Second-in cooperators with a
proven record of cleaning house and offering full cooperation also
become the most likely candidates for affirmative amnesty.
FOOTNOTES
1. For a copy of the Division's Corporate
Leniency Policy and a fuller discussion of its application see
Antitrust Division, U.S. Department of Justice Corporate Leniency
Policy (1993), available at http://www.usdoj.gov/ atr/public
/guidelines/0091.htm; Gary R. Spratling, The Corporate Leniency
Policy: Answers To Recurring Questions, Speech Before the ABA
Antitrust Section 1998 Spring Meeting (Apr. 1, 1998), available at
http://www.usdoj.gov/atr/ public/speeches/1626.htm; Gary R.
Spratling, Making Companies An Offer They Shouldn't Refuse, Speech
Before the Bar Association of the District of Columbia's 35 th
Annual Symposium on Associations and Antitrust (Feb. 16, 1999),
available at http://www.usdoj.gov/ atr/public/speeches/ 2247.htm;
Scott D. Hammond, Detecting And Deterring Cartel Activity Through An
Effective Leniency Program, Speech Before the International Workshop
on Cartels (Nov. 21-22, 2000), available at http://www.usdoj.gov /atr/public/speeches/
9928.htm; Scott D. Hammond, When Calculating the Costs and Benefits
of Applying for Corporate Amnesty, How Do You Put a Price Tag on an
Individual's Freedom?, Speech Before the Fifteenth Annual National
Institute On White Collar Crime (Mar. 8, 2001), available at http://www.usdoj.gov/
atr/public/speeches/7647.htm; Scott D. Hammond, Cornerstones of an
Effective Leniency Policy, Speech Before the ICN Workshop on
Leniency Programs (Nov. 22-23, 2004), available at http://www.usdoj.gov/atr/public/speeches/206611.htm.
2. The Division's Amnesty Plus program is
described below in Section II.E.
3. United States v. Crompton Corporation , No.
CR 04-0079 MJJ (N.D. Cal. 2004).
4. The calculation of a corporate defendant's
Guidelines fine range is based largely upon the company's volume of
commerce in the product or service affected by the cartel for the
entire duration of the conspiracy. The company's base fine under the
Guidelines is generally 20% of the company's volume of commerce.
U.S.S.G. §§ 2R1.1(d)(1); 8C2.4(a)-(b). The base fine is then
multiplied by a minimum and maximum multiplier to arrive at the
Guidelines fine range. U.S.S.G. § 8C2.7. In cartel cases, U.S.S.G. §
2R1.1(d)(2) provides that the minimum multiplier must be at least
.75, so the bottom of the Guidelines range would be at least 15% of
the volume of commerce. The minimum and maximum multipliers are
determined from the company's culpability score, which is based on
factors such as the number of employees in the company or relevant
business unit, the involvement in or the tolerance of the offense by
high-level or substantial authority personnel, the company's prior
criminal history, any obstruction of justice by the company, and the
company's cooperation and acceptance of responsibility. U.S.S.G. §§
8C2.5, 8C2.6. In determining where within the range the fine should
fall, the Guidelines provide that the Court consider, among other
factors, the company's role in the offense, the need for deterrence,
the need for the sentence to reflect the seriousness of the offense,
the gain or loss caused by the conspiracy, measures taken by the
company to prevent a recurrence of the offense, the lack of an
effective compliance program, and the prior criminal record of any
high-level personnel who were involved in, tolerated or were
willfully ignorant of the cartel. U.S.S.G. § 8C2.8. The Guidelines
Manual is available at http://www.ussc.gov/guidelin.htm. For a
discussion of the impact on antitrust sentencing of United States v.
Booker, 543 U.S. 220 (2005), which changed the nature of the U.S.
Sentencing Guidelines from mandatory to advisory, see Scott D.
Hammond, Antitrust Sentencing in the Post- Booker Era: Risks Remain
High for Non-Cooperating Defendants, Speech Before the ABA Section
of Antitrust Law Spring Meeting (Mar. 30, 2005), available at
http://www.usdoj.gov/atr/public/speeches/208354.htm.
5. See U.S.S.G. § 1B1.8(a)-(b).
6. See e.g. United States v. Hynix
Semiconductor Inc. , CR 05 00249 SI (N.D. Cal. 2005); U.S. v. Jo
Tankers B.V., Crim. No.: 04-221 (E.D. Pa. 2004); U.S. v. Odfjell
Seachem AS, Crim. No.: 03-654 (E.D. Pa. 2003).
7. See U.S.S.G. § 1B1.8, Application Note 1
("[S]ubsection (b)(5) provides that consideration of such
information is appropriate in determining whether, and to what
extent, a downward departure is warranted pursuant to a government
motion under § 5K1.1 (Substantial Assistance to Authorities); e.g.,
a court may refuse to depart downward on the basis of such
information.").
8. For example, in the Division's parcel
tanker investigation, Odfjell received a 30% discount off the bottom
of its minimum Guidelines sentence. Odfjell contacted the Division
to offer its cooperation the day after the investigation went overt.
It made its key personnel available to the Division in a timely
manner, and two of its top executives agreed to submit to U.S.
jurisdiction, serve jail terms, and cooperate with our
investigation. For its cooperation, Odfjell was rewarded with a 30%
discount off its minimum Guidelines fine.
9. While it is possible that a corporate
defendant could obtain an even greater cooperation discount than an
earlier cooperator by disclosing an Amnesty Plus "whopper," no
corporate defendant has ever leapfrogged over another on this basis.
That is not surprising, however, given that the majority of the
Amnesty Plus recipients are second-in companies who have already
positioned themselves to earn the best deal short of corporate
amnesty. See Section II.E below.
10. U.S.S.G. § 8C2.8(a)(2) lists as one of
the factors to consider in determining a corporate fine within the
Guidelines range "the organization's role in the offense."
Application Note 1 to this Guideline cites specifically to antitrust
offenses:
This consideration is particularly appropriate if the guideline
fine range does not take the organization's role in the offense into
account. For example, the guideline fine range in an antitrust case
does not take into consideration whether the organization was an
organizer or leader of the conspiracy. A higher fine within the
guideline fine range ordinarily will be appropriate for an
organization that takes a leading role in such an offense.
11. See Scott D. Hammond, An Update of the
Antitrust Division's Criminal Enforcement Program, Speech Before the
ABA Section of Antitrust Law Fall Forum Cartel Enforcement
Roundtable (Nov. 16, 2005), available at
http://www.usdoj.gov/atr/public/speeches/213247.htm.
12. U.S.S.G. § 8C2.5(c).
13. For a fuller discussion of the Division's
carve-out policies see Scott D. Hammond, Charting New Waters in
International Cartel Prosecutions, Speech Before the ABA Criminal
Justice Section's Twentieth Annual National Institute on White
Collar Crime (Mar. 2, 2006), available at http://www.usdoj.gov/atr/
public/speeches/ 214861.htm.
14. Two of the Crompton carve outs have been
charged and have pled guilty. See Plea Agreement, United States v.
James J. Conway, CR 04-0302 MJJ (N.D. Cal. filed Nov. 4, 2004); Plea
Agreement, United States v. Joseph B. Eisenberg, CR 04-0296 MJJ
(N.D. Cal. filed Nov. 18, 2004). Division case filings are available
at http://www.usdoj.gov/atr/cases.html.
15. Two of those employees have now been
indicted by the Department and are international fugitives. See
Indictment, United States v. Jurgen Ick, CR 05 00520 MJJ (N.D. Cal.
filed Aug. 10, 2005); Indictment, United States v. Gunter Monn, CR
05 00519 MJJ (N.D. Cal. filed Aug. 10, 2005). Two other employees
pled and were sentenced to four months jail each. See Plea
Agreement, United States v. Martin Petersen, CR 04-0386 MJJ (N.D.
Cal. Dec. 2, 2004); Plea Agreement, United States v. Wolfgang Koch,
CR 05-0314 MJJ (N.D. Cal. June 24, 2005).
16. The four Infineon carve outs have been
charged and sentenced to serve jail terms ranging from four months
to six months. See Plea Agreement, United States v. T. Rudd Corwin,
CR 4-0397 PJH (N.D. Cal. Dec. 15, 2004); Plea Agreement, United
States v. Heinrich Florian, CR 04-0397 PJH (N.D. Cal. Dec. 15,
2004); Plea Agreement, United States v. G ü nter Hefner , CR 04-0397 PJH (N.D. Cal. Dec. 15, 2004); Plea Agreement,
United States v.
Peter Schaefer, CR 04-0397 PJH (N.D. Cal. Dec. 15, 2004).
17. Four of the Hynix carve outs have been
charged, pled guilty, and have been sentenced to serve jail terms
ranging from five to eight months. See Plea Agreement, United States
v. Dae Soo Kim, CR 06-0126 PJH (N.D. Cal. Mar. 1, 2006); Plea
Agreement, United States v. Chae Kyun Chung, CR 06-0126 PJH (N.D.
Cal. Mar. 1, 2006); Plea Agreement, United States v. Kun Chul Suh,
CR 06-0126 PJH (N.D. Cal. Mar. 1, 2006); Plea Agreement, United
States v. Choon Yub Choi, CR 06-0126 PJH (N.D. Cal. Mar. 1, 2006).
18. Three of the Samsung carve outs have been
charged and have agreed to plead guilty. See Information, United
States v. Sun Woo Lee, Yeongho Kang, Young Woo Lee, CR 06-0180 CRB
(N.D. Cal. filed Mar. 22, 2006); Press Release, Dept. of Justice,
Three Samsung Executives Agree to Plead Guilty, Serve Jail Time for
Participating in DRAM Price Fixing Conspiracy (Mar. 22, 2006),
available at
http://www.usdoj.gov/atr/public/press_releases/2006/215199.htm.
19. See Scott D. Hammond, Cornerstones of an
Effective Leniency Policy, Speech Before the ICN Workshop on
Leniency Programs (Nov. 22-23, 2004), available at
http://www.usdoj.gov/atr/public/speeches/206611.htm.
20. Of these three factors, the first two are
given the most weight.
21. See Plea Agreement, United States v.
Bayer AG, CR 04-0235 MJJ (N.D. Cal. Dec. 9, 2004).
22. See footnotes 14 and 15 above.
23. The Division has a policy of treating the identity of amnesty
applicants as a confidential matter. However, in this case, Crompton
issued public statements announcing its acceptance into the
Division's Corporate Leniency Program on each of these four
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