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Challenges and co-ordination of leniency programmes – HAMMOND – June 2018 OECD discussion


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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

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Challenges and co-ordination of leniency programmes – HAMMOND – June 2018 OECD discussion

  1. 1. OECD Roundtable on Challenges and Coordination of Leniency Programs Scott Hammond June 5, 2018
  2. 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. 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. 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. 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. 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. 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
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