Changes and Trends


A continuing change on the criminal side of antitrust law is the use of the Department of Justices leniency and amnesty policy. The corporate leniency policy was first introduced in 1978 but did not see wide acceptance and use until it was revised in 1993. For instance, the Department of Justice reported in 1999 that it was receiving an average of two leniency applications per month, a rate 20 times higher than under the 1978 program. This revised policy (and the individual leniency policy announced in 1994) has had a profound impact on how antitrust lawyers handle grand jury investigations in criminal cases. Prior to the days of leniency and amnesty, when a company received a grand jury subpoena, it would assume that its industry competitors probably received the same subpoena. The company would then check with its competitors , find out who their lawyers are, and those lawyers would meet and strategize to fight the government together. The lawyers would even let each other know what each other's witnesses testified to during the grand jury hearing and pass that information back and forth pursuant to a joint undertaking privilege. In the past, there was a lot of cooperation amongst the defendants.

Realizing the amount of cooperation existing among defendants, in 1978, the government revamped its policies. It declared that if a company were to discover that it has been involved in an antitrust violation, and if it should tell the government before the government finds out about it on its own, then the government would give the company amnesty. However, in order to receive that amnesty, the company would have to be the first one to come clean, and cannot have been the ringleader. At that point, the other companies under investigation would become the targets. In order to make the amnesty program more attractive, the policy was revised in 1993 in two significant respects. First, the grant of amnesty was extended to certain situations where the Department of Justice already had an ongoing investigation and, second, amnesty was extended not only to the corporation but also to its officers, directors and employees . That revised policy obviously changed the dynamics between and among defendants very quickly.

Once a grand jury subpoena is served today, the first thing a defense lawyer should do is review the subpoena document requests carefully and quickly go to the company and attempt to determine the Justice Departments potential legal theories (e.g., is their cause of action about bid-rigging or price-fixing or market allocations of some sort ?). Usually you would start your investigation with the client's sales department, since that is where most of the activity being investigated would have taken place. You would interview those people expeditiously, find out what they know and locate the potentially relevant documents. A determination must be made quickly whether your client has a major antitrust problem on its hands. Assuming that the investigation uncovers antitrust concerns, at that point, the company must decide whether it wants to wait things out to see if the government indicts them, or whether it should race to meet with the Justice Department in order to seek amnesty. There will almost always be some company willing to be the first in the door in order to receive the advantage of not having their company or employees branded with the criminal indictments; therefore, delay can work against your client.

Additional recent changes in the Department of Justice policy affect the way these quick investigations are being conducted . The new guidelines for the prosecution of business organizations were published January 20, 2003. Sometimes referred to as the Thompson Memorandum (named after Larry D. Thompson, Deputy Attorney General in the Department of Justice), the new guidelines attempt to determine the authenticity of a companys actual cooperation with a government investigation as part of the process of determining whether to prosecute the business organization. According to the Thompson Memorandum, as a matter of law, a corporation can be held criminally liable for the acts of its directors, officers, employees and agents if the acts were within the scope of corporate duties and intended, at least in part, to benefit the corporation. Therefore, any unsupervised employee committing a crime that benefits the corporation even slightly can potentially expose the corporation to criminal prosecution. While a prosecutor will examine many factors in order to determine the proper treatment of a corporate target, the Thompson Memorandum notes that consideration will be given to the corporations willingness to cooperate in the investigation of its agents, including, if necessary, the waiver of corporate attorneyclient and work product protection. This waiver would apply to corporate internal investigations and with respect to communications between specific directors, officers and employees and counsel. Some have suggested that the corporation and its counsel are being deputized to assist the government prosecute the case.

The impact of the Thompson Memorandum is that it now may be more difficult for corporate counsel to take a quick look and gather the facts necessary to determine whether the corporation is facing antitrust liability so that amnesty or immunity can be considered . Employees may not want to talk to corporate counsel without having counsel of their own. Employees may view the corporation and corporate counsel as the enemy, who has been enlisted by the government to aid the government and not the employee.

A collateral problem also arises in the context of civil suits . If a corporation acquiesces to the government demand for a waiver of the attorney-client or work product privileges, it has arguably destroyed the privileges for discovery in the antitrust civil suits that certainly will follow. Indeed, amnesty from criminal prosecution does not protect a company from the private civil suits relating to the same activity. Although the government is sworn to secrecy with regard to grand jury activities, the fact of the investigation usually leaks out. And once that information is publicized, plaintiffs lawyers begin searching for a client to serve as a plaintiff, such as a purchaser of those goods or services. There often will be several suits filed all over the country. Lawyers in charge of the various suits then engage in side-litigation to determine where all the federal suits should be consolidated. Thus, seeking amnesty might free your client from criminal prosecution, but it could set off a powder keg of explosive civil litigation. Yet in the same vein, legislation is being considered that would place a cap on civil damages in cases where the wrongdoer has earned amnesty from criminal punishment .

Another recent trend in the antitrust field is the proliferation of state antitrust cases. While state antitrust laws have existed for decades in fact, the antitrust laws of Kansas pre-date the 1890 Sherman Act as a practical matter, antitrust cases were generally filed in the federal courts. That has now changed. More antitrust cases are now being filed in the state courts because of the perception that federal cases take too long to reach a disposition. On the other hand, state cases where dockets are less crowded are believed to reach trial much quicker. Another reason to file state cases is to avoid consolidation with multiple other cases, as is common in the federal system.

Another trend is the increasing number of Attorney General Cases, where 10 or 15 states will cooperate to bring a single action against a company or group of companies that they perceive to be engaging in illegal antitrust activity. Based on a variety of reasons, more class action lawsuits, antitrust and RICO cases are also being filed today than had been in the past. All over the United States, legislative bodies are passing increasingly stringent tort reform laws. These laws have reduced or eliminated the amount of punitive damages that can be awarded, shortened statutes of limitations, and capped the economic damages on medical malpractice claims. Over time, these reforms have severely cut into the practices of plaintiffs personal injury lawyers. As a result, these lawyers have begun to seek out cases where they could make as much money as before, notwithstanding the tort reforms . One solution has been to bring class action lawsuits and lawsuits involving claims that allow treble damages. Therefore, class action lawsuits and antitrust and RICO cases are now being filed more often by lawyers who traditionally have not operated in those spheres.

Globalization is yet another change in the antitrust field. More cases are now being brought that allege price-fixing activities outside of the United States, but with an impact on the United States economy. It is clear that in the future, we are going to have many more cases with an international flair to them.




Inside the Minds Stuff - Inside the Minds. Winning Antitrust Strategies
Inside the Minds Stuff - Inside the Minds. Winning Antitrust Strategies
ISBN: N/A
EAN: N/A
Year: 2004
Pages: 102

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