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DOJ Launches Antitrust Whistleblower Rewards Program

By the 91pornWhistleblower Team

On July 8, the Department of Justice (DOJ) Antitrust Division announced its creation of the Antitrust Whistleblower Rewards Program, which 鈥渨ill offer rewards for individuals who report antitrust crimes and related offenses that harm consumers, taxpayers, and free market competition across industries from healthcare to agriculture.鈥�^听1听 It is the first rewards program specifically targeting antitrust whistleblowers and comes after years of failed efforts in Congress to pass any kind of antitrust whistleblower legislation.听 DOJ is partnering with the Postal Service on this new initiative.

The Antitrust Whistleblower Program Targets Price-Fixing, Bid-Rigging, and Market Allocation Schemes

Here are the key elements of the new program as DOJ laid out in a Memorandum of Understanding (MOU) accompanying its announcement of the program launch^听2:

• • The Covered Misconduct. The program generally covers criminal antitrust violations under the Sherman Act (15 U.S.C. 搂 1), which as DOJ explains in the MOU will primarily involve horizontal per se unlawful agreements such as price fixing, bid rigging, and market allocation schemes.听 It might also involve other violations of federal law 鈥渢hat impact, distort, or undermine the competitive process or market competition, including fraud, conspiracy, false claims, and kickbacks.鈥�

• • Whistleblower Eligibility. Eligible whistleblowers are those who voluntarily provide original information leading to a criminal conviction and fine of at least $1 million (or an equivalent recovery from a deferred or non-prosecution agreement).听 In addition, the Postal Service must find the criminal conduct in some way affected the Postal Service, its revenues, or its property.听 Individuals who led or originated the illegal activity, forced others to participate, or are employed by DOJ, the Postal Service, or another enforcement agency may not be eligible.

• • Original Information. The information the whistleblower provides must not already be known to DOJ and be derived from the whistleblower鈥檚 independent knowledge, meaning not from publicly available sources but from the whistleblower鈥檚 鈥渆xperiences, communications and observations in business or social interactions, or from independent analysis of public or private data.鈥� 听In addition, information provided by senior leadership, counsel, consultants, accountants, or those serving in a compliance or audit function may not qualify unless the illegal activity involves national security, violent crime, imminent patient harm, or imminent financial or physical harm.

• • Award Amount. The amount of any award will be in DOJ鈥檚 sole discretion but presumptively between 15-30% of the criminal fine recovered.

• • Confidentiality. A whistleblower can make a submission anonymously through an attorney.听 And while the MOU does not otherwise reference whistleblower confidentiality, the Antitrust Division has a strict policy of maintaining the confidentiality of its whistleblowers, with a dedicated webpage providing for this confidentiality and noting it 鈥渨ill not publicly disclose any information . . . that could reasonably be expected to reveal your identity,鈥� and 鈥渁t all times [] takes reasonable steps to minimize the potential [for] your public identification.鈥�^听3

The New Antitrust Program is Modeled After the SEC Whistleblower Program

The program largely follows the SEC Whistleblower Program, which provides awards for those reporting violations of the securities laws.听 By all accounts, that program has been extremely successful, with thousands of whistleblower tips annually, leading to billions of dollars of SEC recoveries.听 The SEC鈥檚 most recent Annual Report to Congress reflects the continued strength of the program, which since its inception in 2011 has made more than $2.2 billion in awards to roughly 450 whistleblowers.

There is Strong Administration Support for Antitrust Whistleblowers

Whether this new Antitrust Whistleblower Program will follow suit remains to be seen.听 Clearly there is strong Administration and DOJ support for the program.听 In announcing the program, DOJ Antitrust Chief Abigail Slater stressed the critical role DOJ hopes whistleblowers will play in helping the Government go after antitrust crimes:

鈥淎ntitrust crimes and related offenses that harm free market competition often occur in secret, making detection a formidable challenge. 听The new Whistleblower Rewards Program will create a new pipeline of leads from individuals with firsthand knowledge of criminal antitrust and related offenses that will help us break down those walls of secrecy and hold violators accountable.听 This program raises the stakes: If you鈥檙e fixing prices or rigging bids, don鈥檛 assume your scheme is safe 鈥� we will find and prosecute you, and someone you know may get a reward for helping us do it.鈥�

In addition, DOJ has created a dedicated Whistleblower Rewards Program webpage, simplifying the process for whistleblowers to make submissions under the new program.^听4

But the strongest indication of Government support for the program is the somewhat convoluted way it authorized the program, completely bypassing Congress and leveraging the pre-existing authority of the Postal Service to issue whistleblower awards.听 Specifically, under 39 U.S.C. 搂 404(a)(7), the Postal Service may 鈥減ay one-half of all penalties and forfeitures imposed for violations of law affecting the Postal Service, its revenues, or property, to the person informing for the same.鈥�

That awards provision seems to be the only reason DOJ is partnering with the Postal Service on this new program and why all awards made under the program are set up to flow through the Postal Service under this pre-existing authority.听 According to 91pornwhistleblower partner Gordon Schnell, 鈥淗ad legislative buy-in been required to authorize the program, it is unlikely Congress would have gone along.鈥澨� Schnell notes Congress has repeatedly failed to pass even antitrust whistleblower protection legislation despite the strong bi-partisan push from the likes of Senators Chuck Grassley and Patrick Leahy.

Potential Pitfalls of the Program

Schnell cautions that 鈥渢he potential downside of this legislative workaround is it adds significant uncertainty to the award process.鈥澨� Notably, providing information that leads to a criminal antitrust penalty is not enough under the program to qualify for an award.听 The violations must also harm the Postal Service.听 This leaves plenty of room for DOJ to deny awards to otherwise worthy whistleblowers because the illegal conduct they report has no direct connection to the Postal Service.

Despite this potential pitfall, Schnell applauds the creation of the Antitrust Whistleblower Program as good news for whistleblowers and for antitrust enforcement: 鈥淲ith DOJ鈥檚 continued support and promotion of the program, we can expect antitrust enforcement to be as rigorous as ever.鈥�

91pornHas Substantial Antitrust and Whistleblower Experience

91pornhas substantial experience representing both antitrust and whistleblower clients.听 On the antitrust side, the firm is responsible for two of the largest antitrust settlements in history, recovering more than $5 billion for our clients.听 On the whistleblower side, the firm has secured numerous landmark settlements, with more than $1 billion recovered for the Government and our whistleblower clients.

Many of our whistleblower matters have involved underlying antitrust violations.听 Among our antitrust whistleblower successes is the roughly $363 million in settlements we helped secure for the Government and our client in a False Claims Act case against several Korean oil companies alleging a bid-rigging scheme to artificially inflate the price the US military paid for fuel contracts for its bases in South Korea. 听It remains the largest False Claims Act antitrust recovery ever.

If you would like to learn more about our successes in this area, the Antitrust Whistleblower Program, or what it means to be a whistleblower more broadly, please do not hesitate to contact us.听 We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.

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