1. Mark Krotoski September 15, 2015
Interplay of Public and Private Enforcement – Cartel Sanctioning and Deterrence – U.S. Legal System ICN Cartel Working Group SG 1 call series
Mark Krotoski
September 15, 2015
Morgan Lewis
April 1,

2. Public and Private Enforcement Objectives

3. Primary Policy Objectives
Promote competition
Protect consumers
Public and private anti-cartel enforcement objectives
Complementary
Reinforcing

4. Three Separate Levels of Enforcement
Federal Level / Antitrust Division
1890 Sherman Act
Criminal enforcement
Interstate commerce impact
States
1889 first state statutes
State Attorneys General
Private Enforcement
“Private Attorneys General”
Treble damages
Attorneys’ fees to prevailing party
Injunctive relief

5. Reinforcing Aspects Parallel proceedings
In the U.S., the criminal process normally precedes civil proceedings
Civil proceedings typically are stayed pending the criminal investigation
Criminal conviction may be used as prima facie evidence of the anticompetitive conduct in a subsequent civil action [15 U.S.C. § 16(a)]
Leniency
Remains a catalyst to discover many cases
Resulting in criminal and then civil enforcement
Continuing obligation to cooperate with the Antitrust Division and civil plaintiffs

6. Evolving Process Felony offense Increased fines 2004
Antitrust Procedures Act of 1974
Increased fines 2004
Corporations
Fines: From $10 million to $100 million
Individuals
Fines: From $350,000 to $1 million
Prison: From 3 years to 10 years

7. Evolving Process Leniency 2004 Amendment
Considered "most effective investigative tool"
1978 Program
1993 Modifications
1994 Individual leniency program
2004 Amendment
Detrebling of damages if applicant cooperates with plaintiffs in their civil actions
Others remain liable for treble damages on a joint and several basis
[Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA), Pub. L. No , Title 2, §§ ]

8. Evolving Process State Claims
Initially, U.S. Supreme Court disallowed indirect purchaser claims under federal law (1977)
Later, U.S. Supreme Court held that state indirect purchaser claims were not preempted by federal law (1989)
About half of the states have laws allowing indirect purchasers to recover

9. Damages and Remedies
Criminal sentence does not give rise to a right of compensation but may facilitate it
Distinguish objectives
Deterrence
Punishment
Restitution / Compensation
Making victim “whole”

10. Restitution / Compensation
Criminal Restitution
Court authority to order restitution at criminal sentencing
Restitution normally resolved through civil actions with private plaintiffs
Criminal adjudication may facilitate private enforcement
Compensation occurs later as part of the civil process
Leniency Program
Restitution as a condition
“strong presumption in favor of requiring restitution in leniency situations” [DOJ FAQ20]
Make “all reasonable efforts, to the satisfaction of the Antitrust Division, to pay restitution” [Model Conditional Leniency Letter ¶ 2(g)]
Civil Actions
Treble damages
Joint and severally liable

11. INTERPLAY BETWEEN FINES AND REMEDIES

12. Relationship Between Cartel Fines and Remedies
Criminal Fines
Crime Victims Fund
Assist all types of crime victims with access the medical, legal, financial and other services
Inability to pay may be a factor [USSG § §8C2.2]
Criminal case typically precedes civil case
Fine is determined independent of any compensation

13. Offsetting Considerations
Whether a competition agency should take into account compensation paid in imposing a fine?
Presumes knowledge of final compensation
Not common in U.S. system
Criminal case typically precedes civil enforcement
Compensation is not the only objective of criminal case

14. Mark L. Krotoski
Silicon Valley, California
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