Sunday, September 10, 2006
After a two-year battle to keep from being charged, parcel tanker shipping company Stolt-Nielsen S.A. and two of its subsidiaries were indicted for antitrust violations, along with two individuals. The case has been closely watched because this is the first time the Department of Justice has indicted a company that had taken advantage of the Antitrust Division's Corporate Leniency Policy. The Policy, adopted in 1993, states (here) that "[t]he Division has a policy of according leniency to corporations reporting their illegal antitrust activity at an early stage, if they meet certain conditions. 'Leniency' means not charging such a firm criminally for the activity being reported. (The policy also is known as the corporate amnesty or corporate immunity policy.)" The policy is unique in that the first one to report -- assuming it comes early enough -- gets a complete pass and not the more common deferred prosecution agreement or single-count guilty plea seen in other corporate crime cases.
While Stolt-Nielsen originally reported itself under the Policy and received the immunity from prosecution, that all changed when the Department claims to have received information that the price-fixing activities continued. According to the Department's press release (here):
In March 2004, the Antitrust Division revoked the conditional leniency that had previously been granted to the Stolt-Nielsen entities under the Division’s Corporate Leniency Program. Stolt-Nielsen’s conditional leniency was predicated on a number of representations made by the company, including a promise that the company “took prompt and effective action to terminate its part in the anticompetitive activity being reported upon discovery of the activity.” The Division revoked the conditional leniency after it learned from other sources that top Stolt-Nielsen executives, including its managing director Wingfield, had continued to meet with competitors and participate in the conspiracy for months after the scheme’s discovery by Stolt-Nielsen’s then-general counsel, and that Stolt had both withheld and provided false and misleading information about the true extent of the conspiracy.
Stolt-Nielsen obtained an injunction from the District Court prohibiting the indictment because of the Corporate Leniency Policy, but the Third Circuit reversed the lower court, which dissolved the injunction on August 24, 2006, paving the way for the indictment. The company has a number of court filings relevant to the case on its website (here).
The widespread use of deferred prosecution agreements for corporations is a fairly recent phenomenon, and to this point no company has been found to have violated the terms of one, although the ongoing investigation of Bristol-Myers Squibb may raise the issue (see earlier post here). Stolt-Nielsen can still assert its position regarding the Corporate Lenience Policy in a motion to dismiss the indictment because the Third Circuit's decision was based on the limited authority of a court to enjoin the Executive Branch under separation of powers principles, and not the merits of the company's claim that it had not violated the Policy. The way this issue plays out will be interesting for possible future cases involving alleged violations of deferred prosecution agreements. (ph)