This presentation by Scott Hammond, Partner, Gibson Dunn, was made during the discussion “Challenges and co-ordination of leniency programmes” held at the 127th meeting of the OECD Working Party No. 3 on Co-operation and Enforcement on 5 June 2018. More papers and presentations on the topic can be found out at oe.cd/2gt.
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Challenges and co-ordination of leniency programmes – HAMMOND – June 2018 OECD discussion
1. OECD Roundtable on Challenges and
Coordination of Leniency Programs
Scott Hammond
June 5, 2018
2. • A downturn in companies cooperating in international cartel
investigations after another company self-reported in exchange for
“leniency”
• A downturn in self-reporting international cartel activity in the US and
globally in exchange for “full immunity”
• The leniency (second-in) application rate slowed before the downturn in
self reporting
• Proliferation of costs associated with cooperating and settling with an
ever-growing number of jurisdictions on five continents
• Competition authorities have successfully coordinated on fine-
calculation methodologies to mitigate against double-counting
• Competition authorities risk tipping the balance against seeking leniency
by imposing excessive sanctions on the second company to provide
cooperation
Leniency Trending
2
3. • Downturn in companies’ self-reporting international cartel activity in
exchange for full immunity
• Trend cannot be explained by the cyclical nature of cartel investigations
over time
• The Golden Rule: Thou shalt not leave a self-reporting company in a
worse position than a company fighting the authority
• An immunity applicant’s exposure to private damages has increased
while the safeguarding of its self-incriminating information by
competition authorities has diminished
Self-Reporting Trending
3
4. • Private plaintiff settlements fail to adequately incentivize and reward
self-reporting and risk killing “the goose that laid the golden egg”
• Competition authorities need to promote policies and legislation that
honors the Golden Rule and reduces private damage exposure for
companies receiving full immunity
o Differentiating between private damage benefits for immunity
versus leniency applicants?
• 2004 U.S. federal law (ACPERA) reducing exposure for conditional
immunity recipients has not operated to limit private damage exposure
and incentivize immunity applications as intended
Private Damage Payouts Often Exceed Fine Savings
4
5. • Applicants encountering less confidentiality protecting the self-reporter’s
identity and the information provided
• Competition authorities are increasingly required to publicly disclose an
applicant’s information in response to court orders
• Recommend that competition authorities resist compelling “waivers” in
order to promote international cooperation
• Recommend that competition authorities adopt policies and/or promote
legislation designed to safeguard confidentiality to the greatest extent
possible
Erosion of Confidentiality Protections
5
6. • The credible threat of criminal sanctions can be either the greatest
incentive or greatest disincentive to self-reporting and leniency
• The FNE’s (Chile) experience is an OECD Model for:
reigning in an independent and overzealous public prosecutor
working with the National Congress to pass an antitrust criminal law that
simultaneously protects the integrity of the FNE’s Leniency Policy
maximizing transparency in its leniency, leniency-plus, fining and criminal
referral policies
securing the full confidence of the Chilean and international antitrust bar and
business community as well as the Chilean public
Exposing Leniency Applicants to Criminal Prosecution
6
7. • Latin American is a hot spot for self-reporting domestic and international
cartel activity
Chile has joined Brazil and Mexico as a destination for international cartel self-
reporting
Columbia and Peru have joined Chile, Brazil, and Mexico in bringing front-page,
record-breaking domestic cartel cases using their leniency programs
• Andean Competition Commission (CAN) case threatens Colombia’s (SIC)
and Peru’s (INDECOPI) leniency programs and self-reporting throughout
Latin America
SGCAN considering Technical Staff Report recommending maximum fine against
company that self-reported conduct to authorities in Colombia, Peru and Ecuador
Ecuador (SCPM) promised full immunity and then closed its 18-month
investigation, and opened and closed it again, before sending the applicant’s self-
incriminating information to the CAN with a referral to investigate
CAN has no leniency program
Leniency Programs are Fragile
7
8. 8
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