More Boxes to Check for Leniency Applicants

DOJ Updates Leniency Policy and Issues New Guidance

On April 4th, the Antitrust Division of the Department of Justice announced updates to its leniency program, issuing an updated policy and set of frequently asked questions (“FAQs”), marking the first updates to the program since 2017 and offering a window into a higher bar that the Biden Administration is setting for those seeking leniency.

Assistant Attorney General Jonathan Kanter announced these changes during the 2022 Competition Enforcers Summit with the Federal Trade Commission, warning of the “severe consequences” of losing out on leniency if companies “sit on their hands” after learning of a potential violation.  Among the new changes that add additional requirements that parties must meet to qualify for leniency are: (1) a new requirement to “promptly” self-report and (2) a new requirement to undertake remedial measures including institute or improve its compliance program to meet the criteria specified by the Division in its guidance on effective compliance programs.  The new FAQs also provide more guidance regarding the expectations for making restitution to victims.  Speaking at the 2022 Antitrust Law Spring Meeting on April 6th, Deputy Assistant Attorney General for Criminal Enforcement Richard Powers explained that the updates were the result of a year-long process and an effort to “minimize the unknowns” for applicants and to offer clarity to counsel.  He acknowledged that prior public statements might have created some confusion about the program and emphasized that the Division does not “make or change policy” via public speeches.  He also characterized the FAQs as a “living document” and promised more frequent updates to ensure that they address Division practices and practical concerns as they arise. 

Companies seeking leniency under both Type A and Type B leniency must now “promptly” self-report their participation to the Division.  The FAQs indicate that the Division will require a party seeking leniency to prove that its reporting was “prompt” but provide precious little clarity on what that means.  The FAQs make it clear that immediate reporting is not required, companies can still conduct a “preliminary internal investigation in a timely fashion,” but companies who choose not to self-report until after the Division has opened an investigation will not be eligible.  This has the potential to trip up companies and counsel as they grapple with the competing priorities of wanting to conduct a preliminary investigation into potential problematic conduct before seeking leniency and the need to demonstrate promptness.

The revised policy also requires that an applicant use its “best efforts” to make restitution, remediate the harm caused by the illegal activity, and improve its compliance program.  The requirement to remediate and institute an effective compliance program is new, and requires that companies institute or improve programs that will be evaluated against the Divisions guidelines for compliance programs.  The FAQs also state that the applicant must “fully remediate[] the harm caused by the offense” to obtain a conditional leniency letter.  Fully remediate is also undefined, although the FAQs give the example of “reduced worker mobility from a “no poach” agreement,” that presumably may be able to be remediated by the waiver of any restrictive covenants, although that is not specified in the guidance.

The requirement to use best efforts to make restitution is similar to the prior policy that required restitution “when possible,” however applicants now must “present concrete, reasonably achievable plans about how they will make restitution” before receiving a conditional leniency letter, and “actually pay restitution” prior to a final leniency letter.

The leniency program, first instituted in 1993, is the source of the majority of the Division’s criminal investigations and has proven an effective tool to identify and prosecute potential criminal activity.  To qualify for leniency, a company must be first to report its anti-competitive conduct and then it must fully cooperate with any ensuing DOJ investigation and prosecution.  In exchange for reporting their illegal conduct, the leniency program enables companies and their employees to avoid criminal charges in exchange for complete cooperation.