Consent Decree

A type of settlement of an enforcement action, particularly prevalent in the United States, where the defendant concedes that certain of its actions were illegal, pleading guilty, (with or without an immediate fine or legal sanctions, recompense to victims, or efforts to repair harm) and undertakes not to act in that manner again.

The key feature of a consent decree is that if the defendant is subsequently proven to have violated the decree, by acting in a manner it had promised not to, there is no defense of legality, rather the case goes straight to the penalty phase. However, penalties are not always specified in consent decrees and such decrees can be poorly worded, so that the existence of a violation of the decree is not clear and ends up being litigated. Nonetheless, a consent decree is a powerful weapon in a regulator’s arsenal, and its existence can prove useful evidence in a subsequent or parallel civil action brought by victims.

Consent decrees are also frequently used in consumer cases, environmental enforcement actions, and in antitrust, competition law and securities law. See Tomlin Order. The European Commission has recently started to use settlements similar to consent decrees as a competition law remedy and notably in 2013 fined Microsoft Corporation €561 million ($732 million) for failing to comply with the terms of a settlement agreement designed to allow users of Windows® based computers a choice of browsers.

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