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November 24, 2008 4:42 PM

Justice Department Issues New Antitrust Guidelines

Posted by Ed Shanahan

By Sue Reisinger, Corporate Counsel

Just in time for the holidays, the U.S. Department of Justice has released a new model leniency letter for companies who want to avoid being criminally prosecuted for antitrust violations. But the companies may not be so thankful. In the letter, the government tightens up its amnesty program for corporations and individuals.

Along with the model letter, the department's antitrust division issued a new 28-page "Frequently Asked Questions" document clarifying its policies. Both were signed by Scott Hammond, deputy assistant attorney general for antitrust. Hammond had promised a policy update--the first in ten years--after Justice lost its case against Stolt Transportation Group Ltd. late last year.

In that case, Hammond and the antitrust division had granted amnesty to Stolt, then revoked the deal and indicted the the giant shipping company and its two top executives. Stolt successfully battled to get the indictments dismissed because prosecutors had previously agreed to grant amnesty. [See "A Promise Is a Promise," from the July 2008 issue of Corporate Counsel.]

J. Mark Gidley, Stolt's co-lead lawyer in that case and a partner at White & Case in Washington, says Hammond's policy updates are a direct response to the case. "These are important changes," Gidley says, "and they could act as a 'gotcha' for corporate citizens who enter the program."

Hammond calls the changes "clarifications" that are consistent with the division's policies and practices. He says they were made "to clear up any perceived ambiguities."   

Among the changes, the antitrust division is making companies waive any right to seek a preindictment adjudication in court. Stolt originally won a pre-indictment court action, but after that was reversed on appeal, it had to fight the indictment.

The new language states that an amnesty applicant "agrees that it may not, and will not, seek judicial review of any division decision to revoke its conditional leniency unless and until it has been charged by indictment or information."

The division also set a clear date on which the amnesty takes effect--upon the date of the letter--but then added a footnote fudging the issue. The footnote states that if a significant lapse of time occurs between discovering the antitrust violation and then reporting it to Justice, "the division reserves the right to grant conditional leniency only up to the date the applicant represents it terminated its participation in the activity."

A vague date played the key role in Justice's eventually losing the Stolt case. Justice argued that Stolt continued its antitrust activities for months past the date when the company said it had stopped; the court ruled that it didn't matter because amnesty was granted up to the date of the amnesty letter. Gidley says the policy rewording is the antitrust division's attempt to shift the timing burden of proof to the amnesty applicant.

In Gidley's opinion, the new language could be counterproductive for the government. It could put "more onus on corporations than they may be able to achieve, even in the exercise of the utmost of good faith," he says.

Justice's Hammond, however, sees it differently. The new documents, he says, are meant to be helpful to companies by providing "applicants with additional guidance and transparency in addressing issues relating to the implementation of the division's voluntary disclosure programs."

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