WASHINGTON – Yesterday, the U.S. Senate passed the Antitrust Criminal Penalties Enforcement and Reform Act of 2004 Extension Act.  This legislation extends a critical component of the Antitrust Criminal Penalty Enforcement and Reform Act of 2004 (ACPERA), set to expire on June 22, which encourages participation in the Antitrust Division’s leniency program.  As a result, the Justice Department will be able to continue to detect, investigate and aggressively prosecute price-fixing and other cartels which harm consumers.

“ACPERA provides important tools used by the Justice Department to prosecute and detect price-fixing cartels,” Kohl said. “Without the incentives to encourage participation in the Antitrust Division’s leniency program – which has proven remarkably effective – we would leave the Department short-handed and that is not acceptable.”   

The Antitrust Division of the Department of Justice has long considered criminal cartel enforcement a top priority, and its Corporate Leniency Policy is an important tool in that enforcement.  Criminal antitrust offenses are generally conspiracies among competitors to fix prices, rig bids, or allocate markets.  The Leniency Policy creates incentives for corporations to report their unlawful cartel conduct to the Division, by offering the possibility of immunity from criminal charges to the first-reporting corporation, as long as there is full cooperation.  For more than fifteen years, this policy has allowed the Division to uncover cartels affecting billions of dollars worth of commerce here in the United States, which has led to prosecutions resulting in record fines and jail sentences.

An important part of the Division’s Leniency Policy, added by the Antitrust Criminal Penalties Enforcement and Reform Act of 2004, limits the civil liability of leniency participants to the actual damages caused by that company – rather than triple the damages caused by the entire conspiracy, which is typical in civil antitrust lawsuits.  This removed a significant disincentive to participation in the leniency program – the concern that, despite immunity from criminal charges, a participating corporation might still be on the hook for treble damages in any future antitrust lawsuits. The Kohl initiative which passed the Senate yesterday extended that provision, maintaining strong incentives to make use of the Leniency Policy.

This provides important benefits to the victims of antitrust offenses, often consumers who paid artificially high prices.  It makes it more likely that criminal antitrust violations will be reported and, as a result, consumers will be able to identify and recover their losses from paying illegally inflated prices.  The Policy also requires participants to cooperate with plaintiffs in any follow-on civil lawsuits, which makes it more likely that the plaintiff consumers will be able to build strong cases against all members of the conspiracy.

Since the passage of ACPERA, the Antitrust Division has uncovered a number of significant cartel cases through its leniency program, including the air cargo investigation, which so far has yielded over a billion dollars in criminal fines.  In that investigation, several airlines pled guilty to conspiring to fix international air cargo rates and international passenger fuel surcharges.  Not only were criminal fines levied, but one high-ranking executive pled guilty and agreed to serve eight months in prison.  In FY2004, before the passage of ACPERA, criminal antitrust fines totaled $350 million.  Criminal antitrust fines in FY2009 have already surpassed $960 million. 

Kohl serves as Chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights.         

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