Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Antitrust Section comments on U.S. Sentencing Commission’s amendment cycle, (Aug 3, 2015)

By Linda O’Brien, J.D., LL.M.

The Cartel and Criminal Practice Committee of the American Bar Association’s Section of Antitrust Law has submitted comments to the United States Sentencing Commission’s Proposed Priorities for Amendment Cycle Ending May 1, 2016, the ABA announced on July 31. The ABA recommended a study of antitrust offenses—including examination of antitrust sentencing guidelines Section 2R1.1, Bid-Rigging, Price-Fixing or Market Allocation Agreements Among Competitors—and urged the Commission to retain this priority for the upcoming amendment cycle.

Ten percent overcharge. The presumption that the expected overcharge from a cartel was 10 percent has not been evaluated by the Commission in 28 years, and many economists and attorneys have considered whether this accurately reflects the typical gain realized by conspirators and provides effective deterrence to the formation of cartels. Commentators have taken varying positions. Some believe the existing fine provisions are appropriate; others say that empirical evidence of the size of the overcharges realized through price fixing, bid rigging, or other forms of collusion suggest that the 10 percent presumption and 20 percent base fine are too low.

While the ABA recognizes that additional time and expense is associated with calculating overcharges on a case-by-case basis, the 10 percent overcharge and prescribed 20 percent base fine may be too low or too high for a particular defendant. Given the different points of view, empirical evidence, and passage of time, the ABA recommends that the Commission consider whether to modify the assumed overcharge from collusion and base fine associated with such an antitrust offense.

Volume of commerce. Section 2R1.1 provides a framework for the calculation of an organization’s fine for engaging in criminal antitrust offenses in violation of the Sherman Act. The fine is directly tied to the company’s “volume of commerce.” However, the guidelines do not currently provide any clarity or explanation on how to calculate the volume of commerce affected by the conspiracy. The result has been an ad hoc approach to sentencing in international cartel cases that involve multijurisdictional or international conduct.

The ABA recommended that guidance and clarity are necessary to align the guidelines’ approach with governing law and to increase transparency, predictability, and consistency of sentences in corporate antitrust cases. A corporation or individual’s attributed volume of commerce is complex and the lack of guidance makes it difficult for counsel to effectively predict potential criminal fines resulting from antitrust violations.

Individual conspirators. The guidelines for individual conspirators have not been evaluated in 10 years and it is unclear whether volume of commerce is helpful factor in assessing an individual participant’s culpability. A study of sentencing since the Commission last amended the antitrust guideline shows that virtually every sentence of imprisonment imposed for a Sherman Act conviction has been a downward departure from the recommended guideline range. There should be sufficient data for the Commission to consider whether changes are warranted, making the antitrust guideline more reflective of practical and legal realities, and more useful for courts and litigants, the ABA noted.

Compliance programs. Finally, Section 2R1.1 does not provide any adjustment in corporate fines based on compliance programs and, in practice, the U.S. Department of Justice (DOJ) Antitrust Division does not give credit to companies that plead guilty. The current language and interpretation of the guidelines, which results in no possibility of a reduction, does not acknowledge the “second-in-the-door” companies that invest resources in robust compliance programs. Changes to Section 2R1.1 with regard to the treatment of compliance programs may be perceived as undermining the certainty of the DOJ’s leniency program, which currently send the message that only a compliance program that results in an amnesty application will be credited. The lack of certainty in other criminal areas has been the subject of critical commentary by the broader defense bar, the ABA concluded.

News: Antitrust