On April 12, 2013, the Department of Justice announced changes to the Antitrust Division’s carve out practices concerning negotiations with companies that plead guilty to criminal antitrust violations. These changes were issued in the first statement of Assistant Attorney General Bill Baer.
Corporate plea agreements commonly contain a non-prosecution provision that insulates corporate employees from the threat of criminal prosecution. The DOJ will often exclude, or “carve out,” certain employees, leaving them unprotected by the corporate plea agreement. In the past, the Antitrust Division carved out only individuals (i) it believed to be particularly culpable and/or (ii) refused to cooperate with the government’s investigation. The names of all carved-out individuals would then be made publicly available in the body of the plea agreement filed in the district courts where charges were brought.
Going forward, the Antitrust Division announced two notable changes to these practices. First, the Division will only carve out employees who the government has “reason to believe were involved in criminal wrongdoing and who are potential targets of our investigation.” Put otherwise, it will no longer carve out employees for reasons unrelated to culpability; therefore, the only employees the Division is now likely to carve out are those it believes may be appropriate to prosecute. Employees may choose not to cooperate for a variety of legitimate reasons, and this change removes the concomitant negative stigma which previously affected those persons.
Second, the Antitrust Division will no longer “include the names of the carved-out employees” in the plea agreement itself. Instead, these names will be listed in an appendix that the Division will request be filed under seal. Although the courts retain the latitude to reject this request, this increases the likelihood that names of carved out individuals may be kept confidential, consistent with the public policy rationale that it is not ordinarily appropriate to publicly identify uncharged third-party wrongdoers.
Both of these policy changes appear to be welcomed by the antitrust bar. In narrowing the employees who may be carved out, the Antitrust Division has increased the transparency of the carve out process, such that employees who are carved out will now know they are targeted for prosecution. Similarly, the move to file the names of carved out employees under seal will prevent the public from inferring wrongdoing until those employees are formally charged. Together, these policy changes evince the Division’s recognition of the importance of protecting uncharged individuals from the negative publicity of the plea bargain process, and offers corporations a greater degree of certainty in the outcome of the plea.
A copy of the statement issued by Assistant Attorney General Baer is available here.