One of the most important law enforcement techniques that has emerged in the last few decades to combat cartels (anticompetitive collusion between competitors) is the use of programs that promise automatic amnesty to the first member of a cartel to self-report the illegal enterprise. These amnesty programs enable law enforcement authorities to gather the evidence they need to build strong cases against other members of the scheme, and, perhaps more importantly, these amnesty programs destabilize cartels—and might even deter their formation—by taking advantage of the incentive that individual cartel members have to cheat on each other. Since the 1990s, after the success of the amnesty program pioneered by the Antitrust Division of the U.S. Department of Justice (DOJ), antitrust amnesty programs have been replicated in many jurisdictions, leading some to declare a “leniency revolution” in competition law.
But the existing amnesty programs have a weakness They usually only offer protection for violations of antitrust laws, leaving even the firm that self-reports the antitrust violations potentially liable for other unlawful conduct that the cartel members engaged in as part of their anticompetitive scheme. And many of these anticompetitive schemes turn out to involve corruption, especially in the public procurement context. Cartels often bribe the official in charge of the procurement process, because a corrupt official can monitor and punish defections from the cartel, facilitate the exclusion of non-aligned competitors, and ensure an equal distribution of cartel profits. A firm that hopes to take advantage of an antitrust amnesty program might have to report all of this to qualify for amnesty, as often the programs require, as a condition for amnesty, reporting on the involvement not only of other cartel members, but of any public officials who may have facilitated the collusive conduct. But the fact that a self-reporting cartel member is not guaranteed amnesty from prosecution for corruption or other associated wrongdoing (such as money laundering) complicates the operation of antitrust amnesty programs, because this lack of guaranteed amnesty weakens the incentive of cartel members to self-report in cases where the cartel has engaged in bribery. The problem is especially pronounced when the penalties for bribery are much more severe than those typically imposed in cartel cases.
This is less of a problem in jurisdictions where anticorruption and antitrust authorities are departments of a single agency, as with the US Department of Justice (DOJ). But in many other jurisdictions, such as the EU, Brazil, and Mexico, competition law enforcement—and administration of the antitrust amnesty programs—are handled by enforcement agencies that do not have authority to prosecute corruption cases. From a potential self-disclosing company’s perspective, this poses a challenge: Disclosing participation in a bribe-paying cartel to the competition authority may also trigger an enforcement action by the separate agency responsible for prosecuting corruption, meaning the company will have to negotiate with both agencies, with the anticorruption agency not bound by the antitrust amnesty program. Indeed, in many countries anticorruption agencies may not have the same authority as antitrust agencies to grant leniency to self-reporting companies. In Brazil, for instance, though an antitrust amnesty program has been in place since 2000, settling corruption cases only became possible in 2014. In Mexico, the antitrust amnesty program was created in 2006, but a program for self-reporting bribery cases only entered into force in 2016. In both countries, although there is an established process for settling corruption investigations, there is no immunity provision for self-reporting; a discount in the applicable fines is often the best a firm can hope for. And even when both the antitrust agency and the anticorruption agency have authority to settle and grant leniency, the mere fact that a company knows it will need to enter into two or more separate negotiations increases the uncertainty and costs associated with self-disclosure, undermining the effectiveness of the amnesty program.
How should this problem be addressed in those countries where merging authority over antitrust and anticorruption enforcement in a single agency is not feasible or desirable? There are several possibilities:
- The most straightforward solution, though also the most ambitious, would be to adopt legal reforms that extend some protection from corruption prosecution to those firms that disclose corruption episodes in the context of applying for antitrust leniency. If a blanket rule is not appropriate or practical, countries might consider giving their antitrust agencies more say in anticorruption investigations, at least for those anticorruption investigations that originated with a disclosure to the antitrust authorities. These bold solutions, though, might not be politically possible, especially since the agencies responsible for anticorruption enforcement might view such initiatives as an encroachment on their domains.
- An alternative strategy would be to create working groups for joint negotiations—a kind of one-stop shop. This could lower the costs and uncertainty of having multiple negotiations. The challenge here is that the agencies responsible for anticorruption enforcement are, as noted above, generally resistant to the idea of simply granting immunity from prosecution for self-disclosing firms, preferring instead to take the voluntary disclosure into account as a mitigating factor when negotiating the size of the fine. Having authorities negotiating together but looking for significantly different outcomes could increase the complexity of negotiating an agreement. The difficulties of joint negotiations are compounded further by the fact that the two agencies will be interested in different kinds of facts and evidence: antitrust agencies would be more focused in evidence of an agreement among competitors, while anticorruption agencies would be looking to evidence of illegal payments. Still, a joint negotiation might be in the interest of all parties at least in some cases.
- Even if a joint negotiation to resolve a specific case is not possible or desirable, the agencies responsible for antitrust and anticorruption enforcement should still create working groups to discuss their respective policies on self-reporting firms and find ways to harmonize their strategies. Each agency should take into account how these antitrust amnesty programs impact, and are impacted by, the enforcement approaches of other agencies. This requires agencies to engage in substantial exchange of information about the implementation of their programs. Fostering such exchange may be difficult in context where agencies do not have a history of cooperation, requiring a more central authority to work as a facilitator.
Anticorruption authorities should care about preserving antitrust amnesty programs not only because of their importance in advancing competition policy, but also because such programs can be an effective tool for anticorruption policy as well. The exposure of anticompetitive cartels will often also reveal egregious corruption schemes involving public procurement—schemes that might have otherwise gone undetected. It is therefore in the interests of all agencies involved to find ways to work together to enhance the efficacy of these amnesty programs, even if in some cases they cut against the culture and priorities of the anticorruption authorities.