DOJ's Antitrust Division Reverses Policy on Individual Carve-Outs in Company Plea Agreements

by Wilson Sonsini Goodrich & Rosati

On Friday, April 12, 2013, the Antitrust Division of the United States Department of Justice announced a reversal in policy relating to its negotiations with companies that plead guilty of criminal antitrust violations.1 The new policy significantly affects how the Antitrust Division will approach the plea negotiation process and enforce the criminal antitrust laws.

First, the Antitrust Division announced that it would no longer publicly disclose the names of individuals excluded (or "carved out") from the non-prosecution provision of company plea agreements. This provision protects the company and its employees from further prosecution under the antitrust laws for the conduct at issue (a core benefit for companies entering into the plea), but some employees typically are carved out from this protection. Prior to the announcement last week, the Antitrust Division had a long-standing practice of disclosing the names of these carve-out employees in the plea agreement, a practice that some have called a "perp walk."2 The division now has put an end to this practice, recognizing that "[a]bsent some significant justification, it is ordinarily not appropriate to publicly identify uncharged third-party wrongdoers."3

Second, the Antitrust Division announced that it no longer would carve out individuals from pleas merely for not cooperating in its investigation. Instead, the division will carve out only those individuals who are "potential targets" of the investigation (i.e., only those whom the division has reason to believe were engaged in the criminal conduct at issue and targets for potential prosecution). Prior to the announcement, the Antitrust Division had a long-standing practice of carving out from the non-prosecution protection of a plea agreement two categories of individuals: (1) those the division has reason to believe were involved in criminal wrongdoing (i.e., potential targets) and (2) those who are uncooperative in its investigation or are difficult to find or contact.4 Under the new policy, the division will limit the carve-outs to the first category of individuals. The Assistant Attorney General of the Antitrust Division, Bill Baer, elaborated publicly, stating: "I reached the conclusion that . . . focusing on the group of people who are potentially targets of the investigation, potentially liable, [and] can be charged [] was a better way of defining our carve-out groups."

Both of these policy changes are certainly positive steps in criminal antitrust enforcement. The decision not to identify carve-outs publicly will protect individuals from the tarnish that comes with being excluded from a plea. The decision to carve out only one category of individuals from a plea adds clarity to the process for the individuals and their employers in negotiating the plea. But what may not be entirely certain is how the changes may affect the plea negotiation process. This negotiation process can be a delicate dance with the Antitrust Division, and these policy changes can lead to some missteps by companies (and their counsel) if they are not aware of how the changes affect the incentives and strategies of the division in negotiating a plea.

Potential Effects on Plea Agreements Moving Forward

There are several ways the policy reversal could affect how the Antitrust Division approaches plea negotiations and enforce the antitrust laws, but the following are just a few potential effects that should be considered.

First, despite what some may hope, "limiting" who may be carved out to the potential targets is not likely to limit the number of carve-outs. It is likely to change only the reasoning behind who is carved out. The division typically only seeks cooperation from individuals who have some involvement in the conduct at issue; these individuals (almost by definition) are "potential targets" of the investigation. If an individual refuses to cooperate, the division is still likely to keep the individual on the carve-out list, citing the individual's involvement in the culpable conduct as the reason (instead of non-cooperation as the reason). Indeed, in announcing the recent policy change, the Antitrust Division stated that it "will continue to demand the full cooperation of anyone who seeks to benefit from the non-prosecution protection of a corporate plea agreement, and will revoke that protection for anyone who does not fully and truthfully cooperate with division investigations."

Second, the policy change has the potential to delay, but also the potential to expedite, the plea negotiation process. The "typical" plea negotiation process (if there is one) involves a significant period of time after a company agrees to plead guilty while the Antitrust Division interviews employees who may have had some involvement in the conduct (or receives attorney proffers from employees' counsel). This is to determine the level of assistance that the company can provide and, more important to this discussion, to identify the potential carve-outs. If individuals being interviewed were uncooperative in this process, the division would place them on the carve-out list under the prior policy. Under the new policy, this apparently is not an option, which means that the division may take additional time to "turn the employees around" and ensure cooperation before finalizing the plea. On the other hand, as suggested above, the division simply may identify all employees with involvement as potential targets (and thus carve-outs) whether cooperative or not, which would eliminate the need for an extensive interviewing process and greatly expedite the process.

Third, the lack of transparency in carve-outs allows the Antitrust Division to keep its cards closer to its vest, which can disadvantage other companies and individuals. In the past, when the division filed a plea agreement with a company, other companies and individuals under investigation often looked at the carve-outs to get a better sense of who was cooperating with the division and whom the division may be targeting. This may suggest what facts are available to the division, what facts are not, and the potential timing of the division's access to those facts. This was yet another data point that companies and individuals used in assessing their defenses and strategies in an investigation, but it is now no longer available.

Finally, the Antitrust Division is giving up an effective tool for pressuring individuals to cooperate with investigations: threat of public disclosure. The division rigorously defended its practice of identifying carve-outs in the past in order to keep this enforcement tool.5 So, the new concession is real, significant, and largely at the behest of the defense bar. This inevitably will shift the dynamics in negotiations, as the division staff will enter negotiations believing that they already have given up something significant. The division therefore may be less sympathetic to defense counsel seeking fewer carve-outs.

1 Department of Justice, Office of Public Affairs, "Statement of Assistant Attorney General Bill Baer on Changes to Antitrust Division's Carve-Out Practice Regarding Corporate Plea Agreements," April 12, 2013, available at; see also Leah Nylen, "In Changes to Carve-Out Policy, DOJ to Focus Only on Alleged Wrongdoers," MLEX, April 12, 2012, available at (subscription required).

2 Transcript of Proceedings in Doe v. Hammond, 502 F.Supp.2d 94 (No. 07-1496) (D.D.C. 2007) (quoting Judge Huvelle). Indeed, Judge Huvelle observed, "Frankly I think [the Division's practice] is rather offensive personally."

3 This observation is consistent with what the U.S. Attorneys Manual advises, which all other divisions of the U.S. Department of Justice follow when it comes to disclosing carve-outs. U.S. Attorneys Manual, Title IX, available at Under the new policy, the Antitrust Division will identify the carve-outs in an appendix to the plea agreement and will seek leave to file the appendix under seal.

4 The Deputy Assistant Attorney General for Criminal Enforcement, Scott D. Hammond, explained the Antitrust Division's policy in a speech to the American Bar Association: "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." Scott D. Hammond, "Measuring the Value of Second-In Cooperation in Corporate Plea Agreements", the 54th Annual American Bar Association Section of Antitrust Law Spring Meeting, March 29, 2006, available at

5 The Antitrust Division reasoned that identifying a carve-out is not the same as prosecuting the individual or even alleging wrongdoing; it merely preserves the option of pursuing prosecution. The division further argued that the public has a right to know who is being targeted, citing two authorities in support: the First Amendment and the Crime Victims' Rights Act of 2004. As noted, courts have yet to find a legal basis to prohibit the practice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Wilson Sonsini Goodrich & Rosati | Attorney Advertising

Written by:

Wilson Sonsini Goodrich & Rosati

Wilson Sonsini Goodrich & Rosati on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.