New Antitrust Whistleblower Program Targets Market Manipulation
Whistleblowers can be rewarded for reporting antitrust crimes and related offenses under a new Whistleblower Rewards Program created by a partnership between the U.S. Department of Justice’s (“DOJ”) Antitrust Division, the United States Postal Service (“USPS”), and the United States Postal Service Inspector General (“USPIS”). The new program expands DOJ’s existing authority to reward whistleblowers who come forward with information on antitrust crimes, such as price fixing, bid rigging, and monopolization. The USPS and USPIS’s involvement in the new program reflects the USPS’s historic authority to pay rewards for information on crimes affecting the postal service.
The False Claims Act (“FCA”) has long authorized rewards to whistleblowers who report antitrust crimes that harm the government, such as bid rigging on federal, state, or local contracts, result in successful recoveries for the United States. There has been no such program for whistleblowers who report antitrust crimes affecting the private sector. DOJ’s new program narrows that gap.
Program Eligibility and How Rewards Are Determined
Under the new program, eligible whistleblowers who voluntarily provide original information regarding an eligible criminal violation, and whose information leads to a criminal fine or equivalent recovery of at least $1 million, will be eligible for an award, provided that the violation affects the USPS, its revenue, or property. Whistleblowers may report information anonymously, through an attorney.
Whether a criminal violation is eligible for the new program is within the discretion of the Antitrust Division. The Memorandum of Understanding (“MOU”) issued by the Antitrust Division, USPS, and USPIS specifies that antitrust violations under sections 1, 2, and 3 of the Sherman Act are “presumptively” eligible, as are violations committed to effectuate, facilitate, or conceal violations of the Sherman Act. Also presumptively eligible are violations “targeting or affecting federal, state, or local public procurement” or “targeting or affecting the conduct of federal competition investigations or proceedings.”
Whether a violation affects the USPS is determined by the USPIS. Under the MOU, the USPIS must decide whether the whistleblower’s information “reasonably articulate[s]” violations of law affecting the USPS, its revenues, or property pursuant to federal law—the standard under which Congress has authorized the USPS to pay awards. See 39 U.S.C. § 404(a)(7). To meet this standard, the whistleblower must produce “sufficient facts and evidence” for USPIS to “conclude that the Postal Service has suffered an identifiable harm.” The harm, however, “need not be material or otherwise pose any substantial detriment to the Postal Service.”
The Antitrust Division determines the amount of the whistleblower award, which will presumptively be between 15% and 30% of the recovered criminal fine. Upon the recovery of over $1 million, the Antitrust Division will direct a portion of the recovery to the Postal Service, which pays the reward to the whistleblower.
Insights on Antitrust Violations and Notable Recoveries
The new antitrust whistleblower program stands to dramatically improve the government’s knowledge of violations of law that are often hard to detect—the type of outcome realized by the Securities and Exchange Commission and the Commodity Futures Trading Commission, whose highly successful whistleblower programs have driven billions of dollars in recoveries.
The types of violations the Antitrust Division pursues criminally include:
- Price fixing schemes
- Bid rigging schemes
- Market allocation schemes
The potential benefits of a whistleblower coming forward with information are substantial. Examples of past criminal recoveries include over $2.6 billion in criminal fines and penalties in 2017 against Citicorp, Barclays, JP Morgan, and other international banks for bid rigging and price fixing in the market for foreign currency exchange; $225 million in fines and penalties against Teva for allegedly fixing the prices of generic drugs; and $500 million in fines and penalties against AU Optronics in 2012 for allegedly fixing the prices of LCD panels.
Many of the largest recoveries in the Antitrust Division’s history involve cross-border price fixing, often by companies headquartered outside the United States. Through the new program, international whistleblowers can help call attention to such crimes.
Role of Anonymity and FCA in Supporting Whistleblowers
Importantly, the new program allows whistleblowers to come forward anonymously by submitting their information through an attorney. This protection will encourage whistleblowers to participate when they might otherwise have been reluctant to come forward.
For the program to fulfill its vast potential, however, the Antitrust Division will need to reward whistleblowers consistently and reliably. Unlike the SEC and CFTC whistleblower programs, awards under the antitrust whistleblower program are discretionary. For the Antitrust Division to attract well-placed whistleblowers, whistleblowers need to be confident that their contributions will be rewarded.
Also important to the new program will be how the USPS determines whether it has suffered an “identifiable harm” that authorizes an award. Further guidance from USPS on that standard would be beneficial to clarify what types of conduct are eligible for rewards.
The FCA also offers whistleblowers an established path for coming forward, if the antitrust violations affect the U.S. government. Antitrust violations that potentially implicate the FCA include bid-rigging on federal or state contracts and price fixing on goods and services that the government buys. For whistleblowers, the advantages of the FCA are that awards are mandatory and payable from civil recoveries.
Complementing Civil Enforcement: Broader Impact of the Program
The new antitrust whistleblower program can supplement the FCA by covering criminal violations affecting the government, as well as criminal violations affecting the private sector. One recent precedent is the Antitrust Division’s action against Teva. DOJ followed the Antitrust Division’s $225 million criminal recovery from Teva with a $450 million civil settlement under the FCA, resolving allegations that Teva violated the Anti-Kickback Statute through its price fixing scheme. Whistleblowers with information about antitrust crimes harming the government should consider both the FCA and the new antitrust whistleblower program.
The antitrust whistleblower program is a significant development for whistleblowers. There are limits on who is eligible to be a whistleblower under the new program, as well as what types of information qualify for awards. Individuals interested in reporting information under the new program should consider consulting with an attorney, especially if they intend to report information anonymously.
About Phillips & Cohen
Phillips & Cohen is the most successful whistleblower law firm, recovering over $13 billion for the government. If you know of antitrust violations and would like to speak to an experienced whistleblower attorney, contact Phillips & Cohen for a free, confidential review of your matter.
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