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Measuring the Value of Second-In Cooperation in Corporate Plea Negotiations
The 54th Annual American Bar Association
Spring Meeting "Measuring the Value
of Second-In Cooperation
in Corporate Plea Negotiations" Address by SCOTT D. HAMMOND Deputy Assistant Attorney General
March 29, 2006 Measuring the Value of Second-In Cooperation
in Corporate Plea Negotiations I.	Introduction
The rewards for admission into the Division's Corporate Leniency Program to
the first qualifying company to come forward and report a cartel offense have been
much touted.(1) While the top prize is reserved for the amnesty applicant, a company
that moves quickly to secure its place as "second in the door" and provides valuable
cooperation can also reap substantial benefits. This paper discusses the rewards
and incentives available for "second-in" companies that approach the Division after
the opportunity for amnesty has passed. A key component in the success of the Division's cartel enforcement program,
particularly the Corporate Leniency Program, is transparency and predictability. Specifically, companies and their executives must be able to predict with a high
degree of certainty the rewards if they self report and cooperate, and the
consequences if they do not. With leniency, the rewards for the company and its
qualifying employees ­ no criminal convictions, no criminal fines, and no jail
sentences ­ are as predictable as they are extraordinary. The rewards for second-in companies are not as uniform, because the value of
a second-in company's cooperation can vary dramatically from case to case. While a
second-in company's cooperation typically will significantly advance an
investigation, there are times when the cooperation is either cumulative or no
longer needed. For example, second-in cooperation likely would more significantly
advance an investigation of a five-firm conspiracy than a two-firm conspiracy. Second-in cooperation could come at the outset of an investigation when the
Division is still developing key evidence against others, or after significant evidence
already has been provided through an amnesty applicant or a successful covert
investigation complete with consensual monitoring and coordinated search
warrants. The second-in company's cooperation could include self reporting on
previously unidentified cartels warranting "Amnesty Plus" credit,(2) or be limited to
conduct already detected. The second-in company could offer its cooperation
immediately after learning of the existence of the investigation, or only after it
receives a target letter or after it has been indicted. If the Division were to establish an absolute, fixed discount for second-ins
without consideration of these types of variables, then the need for proportionality
would be sacrificed for increased transparency. Proportional treatment also often
requires consideration of factors shared only with the sentencing court and not the
public, factors such as the state of the investigation at the time of the cooperation,
the nature and extent to which the cooperation advanced the investigation, and
whether the cooperation earned Amnesty Plus credit for disclosing undetected
cartel offenses. The Division carefully weighs all of these variables in measuring
the value of a company's cooperation to ensure proportional treatment of
cooperating parties across all Division matters. This paper hopefully will provide more transparency as to the potential
rewards and incentives available for second-in companies and the factors considered
in determining the size of the cooperation discount. The paper focuses on the
benefits earned by Crompton Corporation for being second-in-the-door in the
Division's rubber chemicals investigation and provides information that was not
public at the time the company was sentenced.(3) Crompton represents one end of the
spectrum ­ a company that provided exemplary cooperation and, in return, received
an extraordinary 59% discount off its minimum Guidelines criminal fine,
representing a more than $70 million reduction in its fine. Of course, the risk for
the Division in selecting this example is that other companies may come forward
and claim that they deserve the same percentage reduction received by Crompton. However, as described below, the bar was set very high in the Crompton case. Any
company that hopes to match or even approach Crompton's discount will have to
earn it. II.	Potential Rewards for Second-In Cooperation
Reward #1: Reducing The Scope Of Affected Commerce Used To
Calculate A Company's Guidelines Fine Range One significant benefit a second-in company may receive actually comes
before ­ and may turn out to be even more valuable than ­ the calculation of the
cooperation discount off its Guidelines fine range.(4) If a company's cooperation
pursuant to a plea agreement reveals that the suspected conspiracy was broader
than had been previously identified ­ either in terms of the length of the scheme or
the products, contracts or commerce affected ­ then the Division's practice is not to
use that self-incriminating information in determining the applicable Guidelines
range, except as provided in Section 1B1.8(b) of the U.S. Sentencing Guidelines.(5) It
is not uncommon for a second-in corporate defendant to have its fine drastically
reduced on this basis. For example, an amnesty applicant may not have evidence of
the origins or the full scope of a cartel because it joined an ongoing conspiracy, it
was only a peripheral player, or its executives who participated in the cartel's
formation are no longer employed by, or available to, the applicant. Under any of
these scenarios, a second-in company with information that expands the scope of
the cartel would not only receive a substantial cooperation discount below the
minimum Guidelines fine, but also the company's volume of affected commerce for
cartel activity previously unknown to the Division would not be included in the
defendant's Guidelines fine calculation. There are numerous examples of corporate
defendants that have benefitted greatly by providing timely cooperation and
qualifying for this §1B1.8(b) credit.(6) The Division's practice in this area is particularly generous in light of two
considerations. First, the Division is not required to restrict the use of self-incriminating information in calculating a defendant's applicable Guidelines fine
range, unless it binds itself as part of a plea/cooperation agreement. As noted
above, however, the Division's practice is to agree to such language in its plea
agreements as an additional inducement for companies to cooperate fully. Second,
U.S.S.G. §1B1.8(b)(5) and its corresponding Application Note 1 make clear that a
defendant who qualifies for §1B1.8 credit may not be entitled to a "double dip" by
also obtaining a departure based on substantial assistance.(7) While the Guidelines
grant sentencing courts discretion to refuse to depart, the Division has routinely
recommended that companies that qualify for §1B1.8 credit also receive downward
departures, and there are no examples where a court has failed to accept the
government's recommendation to grant a downward departure on this basis. Reward #2: Obtaining A Substantial Cooperation Discount
The reward to second-in companies for timely cooperation that undergoes the
most scrutiny is the amount of the fine reduction. Second-in companies that
provide cooperation that substantially advances an investigation can expect to
receive a plea agreement that recommends a substantial assistance departure
pursuant to U.S.S.G. §8C4.1 and a fine below the minimum Guidelines range. The
amount of the recommended departure ­ often referred to as the "cooperation
discount" ­ is measured as a percentage and reflects the overall value of the
cooperation provided. As discussed below, the cooperation discount is applied to a
specific point within the Guidelines range. Cooperation discounts for second-in
companies are, on average, in the range of 30% to 35% off of the bottom of the
Guidelines fine range.(8) Subsequent cooperators may still qualify for a cooperation
discount below the Guidelines minimum if they provide substantial assistance. However, their cooperation discount will be lower, often substantially lower, than
the second-in company, unless the company's cooperation includes the disclosure of
undetected violations that warrant extraordinary Amnesty Plus credit.(9) Section III below discusses the key factors that the Division considers when
measuring and assessing a company's cooperation discount and looks at how these
factors were applied in the Crompton case. Reward #3: Securing A Low Starting Point For Application Of The
As noted above, the cooperation discount is applied to a specific point within
the Guidelines sentencing range. Except in a few situations that are described
below, the cooperation discount starting point for a number-two company is the
minimum Guidelines fine. This reward for early cooperators can be extremely
valuable. Subsequent cooperating companies that come forward after the second-in
company may face a cooperation discount starting point well above the minimum
Guidelines fine. Some may encounter cooperation starting points as high as the
middle to the top of the Guidelines range, depending on how late the company is to
accept responsibility. In the case of Crompton, its Guidelines fine range was between $121 and $242 million. Crompton's cooperation discount of 59% was applied to the minimum Guideline fine of $121 million, resulting in a fine of $50 million. Therefore, before even applying the 59% cooperation discount, Crompton benefitted from having the minimum Guidelines fine as its cooperation discount starting point. For example, if Crompton's cooperation starting point had been at the middle of the range ($181 million) and its cooperation discount remained the same, Crompton would have faced a fine of $75 million. There are two principal situations in which the cooperation discount for a
second-in company will not be applied to the minimum Guidelines fine. The first
situation is where the company had a significant leadership role in the conspiracy. The company's role in the offense will result in a sentencing enhancement, much
like high-level, culpable individuals face at sentencing. The U.S. Sentencing
Guidelines specifically recognize this factor, particularly in antitrust offenses,(10) and
the Division has applied it in calculating corporate fines. For example, an
organization with significant market power that organizes and coordinates collusive
activities with its smaller competitors should expect to get this bump. The Division,
however, recognizes the difference between a significant leadership role and the
more common situations in which multiple players each have equally important
roles in coordinating and implementing illegal agreements; in the latter situations,
no upward adjustment is warranted. The other situation is "Penalty Plus." The Division's Penalty Plus program is
the flip side of its Amnesty Plus program.(11) As discussed more fully below, Amnesty
Plus induces companies that are already under investigation by the Division to
clean house and report violations in other markets where they compete. Companies
that elect not to take advantage of the Amnesty Plus opportunity risk harsh
consequences. If a company fails to discover and report the second offense, and then
later finds itself negotiating a plea after the conduct is discovered by the Division,
then it should expect to receive a cooperation discount starting point at least as
high as the midpoint of the Guidelines range for the second offense. If the Division
learns that the company discovered the second offense and simply decided not to
report it when it had a chance to qualify for Amnesty Plus credit, then the
sentencing consequences will be even more severe. In that case, if the conduct is
discovered and successfully prosecuted, the Division's policy is to urge the
sentencing court to consider the company's and any culpable executives's failure to
report the conduct voluntarily as an aggravating sentencing factor. We will request
that the court impose a term and conditions of probation for the company pursuant
to U.S.S.G. §8D1.1 - §8D1.4, and we will pursue a fine or jail sentence at or above
the upper end of the Guidelines range. In addition to the considerations above,
where a corporate defendant has a prior criminal history, its culpability score may
be increased resulting in a higher Guidelines fine range.(12)
Reward #4: Securing More Favorable Treatment For Culpable
Second-in companies that move quickly to cooperate also have an opportunity
to minimize the number of individual employees who are subject to prosecution and maximize the opportunity for those culpable executives that are subject to
prosecution to receive favorable plea resolutions. Most corporate plea agreements
provide a non-prosecution agreement for company employees who cooperate fully in
the investigation. Yet certain culpable employees, employees who refuse to
cooperate, and employees against whom the Division is still developing evidence
may not receive any protection under the company plea agreement. These
individuals are often referred to as "carve outs," meaning they are excluded (or
"carved out") of the company deal. Culpable carve outs must negotiate separate
plea agreements or face indictment. Most companies place a high value on
minimizing the number of carve outs.(13)
Second-in companies that cooperate early in an investigation often have the
advantage of being able to offer new and significant evidence through multiple
employees. When this is the case, the Division will typically carve out only the
highest-level culpable individuals as well as any employees who refuse to cooperate; mid- to lower-level employees who provide significant evidence furthering the
investigation will be offered non-prosecution protection under the corporate plea
agreement. In addition, those employees who are carved out often are able to
negotiate more favorable deals because they are in a position to offer valuable
cooperation early on in an investigation. In Crompton, three high-level employees were carved out of the corporate
plea agreement.(14) Subordinates of these carve-outs who engaged in illegal conduct,
however, received full protection as part of the company plea in return for their
cooperation. In comparison, Bayer AG, the number-three company in the rubber
chemicals investigation, had five high- and mid-level individuals carved out of its
corporate plea agreement.(15) Similarly in the Division's DRAM investigation,
second-in Infineon had four individuals carved out of its plea agreement,(16) while
third-in Hynix had five carve outs(17) and fourth-in Samsung had seven.(18) Reward #5 : Increasing The Likelihood That A Company Will Qualify
For Amnesty Plus Credit Here is a remarkable statistic: roughly half of the Division's current
international cartel investigations were initiated by evidence obtained as a result of
an investigation of a completely separate market. Most of the corporate defendants
in international cartel cases are multinational companies selling hundreds of
different products. It will come as no surprise then to learn that the Division's
experience is that if a company is fixing prices in one market, the chances are good
that it is doing so in other markets as well. If an executive readily meets with
competitors to allocate customers, then he or she has likely done it before in his or
her career. And, if you go back further in time, you will likely find a mentor who
taught the colluding executive the tricks of the trade. Armed with this experience,
the Division has had great success engaging in a strategy of "cartel profiling"
techniques aimed at ferreting out violations that sprout "cartel trees" ­ where one
investigation will eventually give root to prosecutions in a half-dozen or more
different markets.(19) The Division's success in rolling one investigation into another is well known
within the antitrust bar and business community. Companies understand that they
cannot afford to remain blissfully ignorant by limiting the scope of their internal
investigation. Nor, can they hunker down and hope for the best if their internal
investigation reveals antitrust violations in other markets before it is detected by
the Division. The risks and the consequences to the company and its executives are
too great. Instead, companies are taking advantage of the Division's Amnesty Plus
Policy, which provides for more lenient treatment in an ongoing investigation when
a cooperating company discovers an unrelated antitrust violation and reports it to
the Division. As the name suggests, the rewards for Amnesty Plus are twofold. The
cooperating company not only receives the benefits of full amnesty in the uncovered
offense, but also receives a substantial additional discount in its fine for its
participation in the first conspiracy. The size of the additional discount depends on
a number of factors, including: (1) the strength of the evidence provided by the
cooperating company in the amnesty product; (2) the potential significance of the
uncovered case, measured in such terms as the volume of commerce involved, the
geographic scope, and the number of co-conspirator companies and individuals; and
(3) the likelihood the Division would have uncovered the cartel absent the self
reporting, i.e., if there is little or no overlap in the corporate participants and/or the
culpable executives involved in the original cartel under investigation and the
Amnesty Plus matter, then the credit for the disclosure will be greater.(20) The main beneficiaries of the Amnesty Plus program have been second-in
companies that are quick to clean house to determine whether they have antitrust
exposure in other markets where they might qualify for Amnesty Plus credit. Crompton is a prime example of a company whose independent board of directors
decided to leave no stone unturned in its commitment to investigate, identify and
report antitrust violations after the rubber chemical investigation commenced. As
discussed below, the board's strategy resulted in the company receiving an
extraordinary reduction in its rubber chemicals fine, and it also allowed the
company to win the race for amnesty ­ thereby securing nonprosecution protection
for the company and its employees ­ on multiple additional products that have
already resulted in substantial penalties against co-conspirators.
Reward #6: Qualifying As A Candidate For Affirmative
Amnesty As noted above, when the Division is investigating suspected international
cartel conduct in one market, the chances are about even that it will lead to the
Division opening up an investigation into cartel conduct in a second, unrelated
market. Sometimes, the second-in company detects it before we do and qualifies for
Amnesty Plus credit. Other times, the Division discovers it first. When the
Division uncovers it first, staff may elect to approach one of the subject companies
with information about the suspected cartel and provide it with an opportunity to
cooperate in the covert investigation in return for amnesty. This strategy, known
as "affirmative amnesty," gives the amnesty candidate a head start in the race for
amnesty when its competitors will not even be aware that the gun has sounded. In
return, the Division seeks cooperation from an insider who will expose the inner-workings of the cartel. The Division is very circumspect in its application of the affirmative amnesty
strategy. Once the Division discloses the existence of the investigation to the
affirmative amnesty candidate, it runs the risk that word of the investigation will
leak to the other subjects, thereby losing the element of surprise and jeopardizing
the preservation of documents and testimony. Notwithstanding the heightened risk
of obstructive conduct, the Division has successfully employed this strategy on a
number of occasions by targeting companies ­ usually publicly-owned multinational
companies ­ that have already established their bona fides by accepting
responsibility, cleaning house, and offering full and timely cooperation on other
Division criminal matters. Typically, only companies that have obtained amnesty,
amnesty plus, or second-in cooperation status would warrant consideration as a
candidate for affirmative amnesty.
III.	Calculating the Cooperation Discount Percentage: The Crompton Case
Turning to the calculation of the cooperation discount, three key factors
largely determine the size of the discount. Those factors are (1) the timing of the
cooperation; (2) the value and significance of the information provided; and (3)
whether the company brings forward evidence of other collusive activity and
receives an additional Amnesty Plus discount. Timing of Cooperation
The old adage, "timing is everything," certainly applies to the value the
Division will place on a company's offer to cooperate. It is not enough to accept
responsibility and pledge cooperation to obtain the benefits outlined in this paper,
the cooperation must come at a time when it will substantially advance the
investigation. The Division typically places a premium on getting the first
plea/cooperation agreement to spark the investigation and to put pressure on other
companies to accept responsibility. Those companies who belatedly offer their
cooperation only after learning that a co-conspirator has offered to plead and
cooperate will find the Division taking a much harder line in plea negotiations. The
Division's practice is to give the second-in company a significantly better
cooperation discount than the third company. While the gap between the second
and third companies may not be as stark as it is between the amnesty applicant
and the second-in, it is typically greater than it is between the third and the fourth
company, and so on. The need for speed clearly was not lost on Crompton's counsel or its board of
directors. Within days of first learning of the investigation, Crompton's counsel met
with Division staff, admitted responsibility for its activities in the rubber chemicals
conspiracy and provided a proffer outlining the preliminary findings of its internal
investigation. Crompton promptly identified for staff key documents relating to
activities under investigation and provided extensive attorney proffers based on
internal interviews and its own document review. The company also provided an
overview of additional areas of its internal investigation to be conducted. Crompton's early cooperation allowed the Division to conserve and focus its
resources and to immediately put additional pressure on other subject companies
and individuals to cooperate. Crompton's cooperation also highlights an issue related to the sequence of
when cooperation begins to take place. Specifically, when does the company begin
to provide meaningful cooperation, including access to relevant information,
documents, and witnesses? Does a company provide access to key evidence
uncovered in its internal investigation before a disposition has been agreed upon
with the Division, or wait and hold onto the evidence until the last "t" is crossed in
hopes of using it as leverage to negotiate a more favorable plea agreement? We
encounter both strategies, although we naturally encourage and will reward
companies that provide early and full access to their evidence. Companies that wait
too long in holding onto their evidence as a bargaining tool also run the risk that
the value of the evidence will decrease over time as the investigation continues. The Significance Of Evidence Provided In The
To receive a substantial discount, a cooperating company must provide
evidence, wherever located, of the illegal activity under investigation. This
evidence can come through witnesses, documents, and other information. In the
case of Crompton, key documents and witness proffers were provided initially to the
Division. Later, certain Crompton employees with knowledge of conspiratorial
activity who had been identified by the company were offered full protection
through the company deal and interviewed by the Division.
Invariably, companies like Crompton that are able to provide significant
evidence to the Division also conduct very thorough internal investigations utilizing
a variety of investigative methods to locate, preserve, and produce relevant
evidence. Only after a company has demonstrated that it has committed significant
resources to locating and preserving potentially relevant evidence, documents, and
witnesses, wherever located worldwide, will the Division be fully satisfied that all
potentially relevant evidence has been produced.
Crompton's efforts to quickly locate and preserve evidence at the start of the
rubber chemicals investigation were exemplary. Within hours of learning of the
investigation, Crompton secured a massive amount of documents that were
considered relevant or possibly relevant to the Division's investigation. Some of
these documents were identified by Crompton to the Division as soon as the first
meeting with Division staff. Crompton, with operations worldwide, also
immediately searched for and secured foreign-located documents possibly relevant
to the investigation. The company went so far as to conduct simultaneous raids of
two of it own foreign offices and the office of a joint venture it was involved in to
ensure the preservation of relevant and probative documents. In the end, Crompton
produced more than 500,000 documents ­ in both electronic and paper form ­ and
more than thirty witnesses. The evidence implicated not only other entities, but its
own executives carved out of the company deal. In the rubber chemicals investigation, the Crompton plea agreement was
followed by plea agreements with Bayer AG,(21) former Crompton executives Joseph
Eisenberg and James Conway, and two former Bayer AG executives, Martin
Petersen and Wolfgang Koch, and indictments against two additional former Bayer
AG executives, Gunter Monn and Jurgen Ick. Bayer AG was sentenced to pay a
$66 million fine for its participation in the rubber chemicals cartel. As noted above,
Petersen and Koch were sentenced to four month jail terms. Eisenberg and Conway
are awaiting sentencing, and Ick and Monn are international fugitives.(22)
The final factor that the Division will consider when measuring the value of a
company's cooperation is whether it disclosed any previously undetected antitrust
offenses so as to warrant Amnesty Plus credit. The Crompton case is a prime
example of how both the Division and the company under investigation can benefit
from this program. At the start of the rubber chemicals investigation, Crompton immediately launched a company-wide probe to identify any potentially collusive activities involving other products. Its internal investigation eventually led to amnesty applications in four other product areas ­ ethylene propylene diene monomers (EPDM); heat stabilizers; acrylonitrile-butadiene rubber (NBR); and polyester polyols ­ with combined annual U.S. sales in the hundreds of millions.(23) All four investigations are currently active, and the Division is getting results. The NBR investigation already has resulted in cases filed again Bayer AG and Zeon Chemicals and fines more than $15 million. The polyester polyols investigation has resulted in a fine of $33 million against Bayer Corporation. More cases are expected from these investigations. Attached at the end of this paper is a chart showing the convictions to date of cases resulting from Amnesty Plus leads initiated by Crompton's cooperation. IV.	Conclusion
Although the rewards for being first in the door and receiving amnesty can't
be beat, a second-in company also receives significant rewards in reduced fines and
more favorable treatment of its culpable executives if the company offers timely and
substantial cooperation against remaining subjects in an investigation. To
maximize the rewards, however, the company must act quickly and approach the
Division as early as possible in the investigation and be prepared to leave no stone
unturned in its effort to cooperate with the Division. Evidence, wherever located,
must be quickly located, preserved and provided to the Division as soon as possible. The cooperation rewards are even greater (and the future risk of penalty-plus
minimized) if the company thoroughly cleans house and takes advantage of the
Division's Amnesty Plus program by providing evidence of other cartel activity. Second-in cooperators with a proven record of cleaning house and offering full
cooperation also become the most likely candidates for affirmative amnesty. FOOTNOTES
1. For a copy of the Division's Corporate Leniency Policy and a fuller discussion of its
application see Antitrust Division, U.S. Department of Justice Corporate Leniency
Policy (1993), available at http://www.usdoj.gov/ atr/public /guidelines/0091.htm;
Gary R. Spratling, The Corporate Leniency Policy: Answers To Recurring
Questions, Speech Before the ABA Antitrust Section 1998 Spring Meeting (Apr. 1,
1998), available at http://www.usdoj.gov/atr/ public/speeches/1626.htm; Gary R.
Spratling, Making Companies An Offer They Shouldn't Refuse, Speech Before the
Bar Association of the District of Columbia's 35th Annual Symposium on
Associations and Antitrust (Feb. 16, 1999), available at http://www.usdoj.gov/
atr/public/speeches/ 2247.htm; Scott D. Hammond, Detecting And Deterring Cartel
Activity Through An Effective Leniency Program, Speech Before the International
Workshop on Cartels (Nov. 21-22, 2000), available at http://www.usdoj.gov
/atr/public/speeches/ 9928.htm; Scott D. Hammond, When Calculating the Costs and
Benefits of Applying for Corporate Amnesty, How Do You Put a Price Tag on an
Individual's Freedom?, Speech Before the Fifteenth Annual National Institute On
White Collar Crime (Mar. 8, 2001), available at http://www.usdoj.gov/
atr/public/speeches/7647.htm; Scott D. Hammond, Cornerstones of an Effective
Leniency Policy, Speech Before the ICN Workshop on Leniency Programs (Nov. 22-23, 2004), available at http://www.usdoj.gov/atr/public/speeches/206611.htm. 2. The Division's Amnesty Plus program is described below in Section II.E. 3. United States v. Crompton Corporation, No. CR 04-0079 MJJ (N.D. Cal. 2004).
4. The calculation of a corporate defendant's Guidelines fine range is based largely
upon the company's volume of commerce in the product or service affected by the
cartel for the entire duration of the conspiracy. The company's base fine under the
Guidelines is generally 20% of the company's volume of commerce. U.S.S.G.
§§2R1.1(d)(1); 8C2.4(a)-(b). The base fine is then multiplied by a minimum and
maximum multiplier to arrive at the Guidelines fine range. U.S.S.G. §8C2.7. In
cartel cases, U.S.S.G. §2R1.1(d)(2) provides that the minimum multiplier must be at
least .75, so the bottom of the Guidelines range would be at least 15% of the volume
of commerce. The minimum and maximum multipliers are determined from the
company's culpability score, which is based on factors such as the number of
employees in the company or relevant business unit, the involvement in or the
tolerance of the offense by high-level or substantial authority personnel, the
company's prior criminal history, any obstruction of justice by the company, and the
company's cooperation and acceptance of responsibility. U.S.S.G. §§8C2.5, 8C2.6. In determining where within the range the fine should fall, the Guidelines provide
that the Court consider, among other factors, the company's role in the offense, the
need for deterrence, the need for the sentence to reflect the seriousness of the
offense, the gain or loss caused by the conspiracy, measures taken by the company
to prevent a recurrence of the offense, the lack of an effective compliance program,
and the prior criminal record of any high-level personnel who were involved in,
tolerated or were willfully ignorant of the cartel. U.S.S.G. §8C2.8. The Guidelines
Manual is available at http://www.ussc.gov/guidelin.htm. For a discussion of the
impact on antitrust sentencing of United States v. Booker, 543 U.S. 220 (2005),
which changed the nature of the U.S. Sentencing Guidelines from mandatory to
advisory, see Scott D. Hammond, Antitrust Sentencing in the Post-Booker Era: Risks Remain High for Non-Cooperating Defendants, Speech Before the ABA
Section of Antitrust Law Spring Meeting (Mar. 30, 2005), available at
http://www.usdoj.gov/atr/public/speeches/208354.htm. 5. See U.S.S.G. § 1B1.8(a)-(b).
6. See e.g. United States v. Hynix Semiconductor Inc., CR 05 00249 SI (N.D. Cal.
2005); U.S. v. Jo Tankers B.V., Crim. No.: 04-221 (E.D. Pa. 2004); U.S. v. Odfjell
Seachem AS, Crim. No.: 03-654 (E.D. Pa. 2003). 7. See U.S.S.G. §1B1.8, Application Note 1 ("[S]ubsection (b)(5) provides that
consideration of such information is appropriate in determining whether, and to
what extent, a downward departure is warranted pursuant to a government motion
under §5K1.1 (Substantial Assistance to Authorities); e.g., a court may refuse to
depart downward on the basis of such information.").
8. For example, in the Division's parcel tanker investigation, Odfjell received a 30%
discount off the bottom of its minimum Guidelines sentence. Odfjell contacted the
Division to offer its cooperation the day after the investigation went overt. It made
its key personnel available to the Division in a timely manner, and two of its top
executives agreed to submit to U.S. jurisdiction, serve jail terms, and cooperate with
our investigation. For its cooperation, Odfjell was rewarded with a 30% discount off
its minimum Guidelines fine. 9. While it is possible that a corporate defendant could obtain an even greater
cooperation discount than an earlier cooperator by disclosing an Amnesty Plus
"whopper," no corporate defendant has ever leapfrogged over another on this basis. That is not surprising, however, given that the majority of the Amnesty Plus
recipients are second-in companies who have already positioned themselves to earn
the best deal short of corporate amnesty. See Section II.E below. 10. U.S.S.G. §8C2.8(a)(2) lists as one of the factors to consider in determining a
corporate fine within the Guidelines range "the organization's role in the offense." Application Note 1 to this Guideline cites specifically to antitrust offenses:
This consideration is particularly appropriate if the guideline fine range does not take the organization's role in the offense into account. For example, the guideline fine range in an antitrust case does not take into consideration whether the organization was an organizer or leader of the conspiracy. A higher fine within the guideline fine range ordinarily will be appropriate for an organization that takes a leading role in such an offense. 11. See Scott D. Hammond, An Update of the Antitrust Division's Criminal
Enforcement Program, Speech Before the ABA Section of Antitrust Law Fall Forum
Cartel Enforcement Roundtable (Nov. 16, 2005), available at
http://www.usdoj.gov/atr/public/speeches/213247.htm.
12. U.S.S.G. §8C2.5(c).
13. For a fuller discussion of the Division's carve-out policies see Scott D. Hammond,
Charting New Waters in International Cartel Prosecutions, Speech Before the ABA
Criminal Justice Section's Twentieth Annual National Institute on White Collar
Crime (Mar. 2, 2006), available at http://www.usdoj.gov/atr/ public/speeches/
214861.htm. On April 12, 2013, the Division revised its carve-out practice by limiting employees carved out to those the Division has reason to believe were involved in criminal wrongdoing and who are potential targets of a Division investigation and by listing the names of uncharged carve outs in a plea agreement appendix filed under seal. See Statement of Assistant Attorney General Bill Baer on Changes to Antitrust Division's Carve-Out Practice Regarding Corporate Plea Agreements, http://www.justice.gov/atr/public/press_releases/2013/295747.pdf.
14. Two of the Crompton carve outs have been charged and have pled guilty. See
Plea Agreement, United States v. James J. Conway, CR 04-0302 MJJ (N.D. Cal.
filed Nov. 4, 2004); Plea Agreement, United States v. Joseph B. Eisenberg, CR 04-0296 MJJ (N.D. Cal. filed Nov. 18, 2004). Division case filings are available at
http://www.usdoj.gov/atr/cases.html.
15. Two of those employees have now been indicted by the Department and are international fugitives. See Indictment, United States v. Jurgen Ick, CR 05 00520 MJJ (N.D. Cal. filed Aug. 10, 2005); Indictment, United States v. Gunter Monn, CR 05 00519 MJJ (N.D. Cal. filed Aug. 10, 2005). Two other employees pled and were sentenced to four months jail each. See Plea Agreement, United States v. Martin Petersen, CR 04-0386 MJJ (N.D. Cal. Dec. 2, 2004); Plea Agreement, United States v. Wolfgang Koch, CR 05-0314 MJJ (N.D. Cal. June 24, 2005). 16. The four Infineon carve outs have been charged and sentenced to serve jail terms
ranging from four months to six months. See Plea Agreement, United States v. T.
Rudd Corwin, CR 4-0397 PJH (N.D. Cal. Dec. 15, 2004); Plea Agreement, United
States v. Heinrich Florian, CR 04-0397 PJH (N.D. Cal. Dec. 15, 2004); Plea
Agreement, United States v. Günter Hefner, CR 04-0397 PJH (N.D. Cal. Dec. 15,
2004); Plea Agreement, United States v. Peter Schaefer, CR 04-0397 PJH (N.D. Cal.
Dec. 15, 2004). 17. Four of the Hynix carve outs have been charged, pled guilty, and have been
sentenced to serve jail terms ranging from five to eight months. See Plea
Agreement, United States v. Dae Soo Kim, CR 06-0126 PJH (N.D. Cal. Mar. 1,
2006); Plea Agreement, United States v. Chae Kyun Chung, CR 06-0126 PJH (N.D.
Cal. Mar. 1, 2006); Plea Agreement, United States v. Kun Chul Suh, CR 06-0126
PJH (N.D. Cal. Mar. 1, 2006); Plea Agreement, United States v. Choon Yub Choi, CR 06-0126 PJH (N.D. Cal. Mar. 1, 2006).
18. Three of the Samsung carve outs have been charged and have agreed to plead
guilty. See Information, United States v. Sun Woo Lee, Yeongho Kang, Young Woo
Lee, CR 06-0180 CRB (N.D. Cal. filed Mar. 22, 2006); Press Release, Dept. of
Justice, Three Samsung Executives Agree to Plead Guilty, Serve Jail Time for
Participating in DRAM Price Fixing Conspiracy (Mar. 22, 2006), available at
http://www.usdoj.gov/atr/public/press_releases/2006/215199.htm.
19. See Scott D. Hammond, Cornerstones of an Effective Leniency Policy, Speech
Before the ICN Workshop on Leniency Programs (Nov. 22-23, 2004), available at
http://www.usdoj.gov/atr/public/speeches/206611.htm. 20. Of these three factors, the first two are given the most weight. 21. See Plea Agreement, United States v. Bayer AG, CR 04-0235 MJJ (N.D. Cal. Dec. 9, 2004).
22. See footnotes 14 and 15 above.
23. The Division has a policy of treating the identity of amnesty applicants as a
confidential matter. However, in this case, Crompton issued public statements
announcing its acceptance into the Division's Corporate Leniency Program on each
of these four products.