August 3, 2012

Expanding Protections for Antitrust Whistleblowers — Help is On the Way

By Gordon Schnell 

Two U.S. senators this week proposed legislation that would for the first time extend whistleblower protections to those reporting on violations of the antitrust laws.  The bill, introduced by Senators Patrick Leahy (D-Vermont) and Chuck Grassley (R-Iowa) as the Criminal Antitrust Anti-Retaliation Act, would amend the Antitrust Criminal Penalties Enforcement and Reform Act (ACPERA).  This statute was enacted in 2004 to provide greater incentives for individuals and companies to self report antitrust violations through the Department of Justice’s corporate leniency program.  But these incentives were only directed towards the individuals and companies actually participating in the antitrust wrongdoing.  They were not directed at innocent employees with knowledge of their employer’s anticompetitive activity.

The proposed amendment would change that by directly targeting these potential whistleblowers.  It follows on the heels of a report issued last summer by the Government Accountability Office (GAO) on the impact ACPERA has had on criminal antitrust enforcement.  According to the GAO, the results have been mixed.  There has been little change in the number of wrongdoers applying for leniency.  However, there has been an increase in the number of applications reporting on antitrust misconduct of which the government was not previously aware.  The GAO recommended that protections be afforded to antitrust whistleblowers to encourage them to participate in the antitrust enforcement scheme:

To protect those who take risks to report criminal antitrust violations and help motivate others to do the same, Congress may wish to consider an amendment to add a civil remedy for those who are retaliated against for reporting criminal antitrust violations.

That is exactly what Senators Leahy and Grassley have proposed.  The new legislation would provide a civil remedy to antitrust whistleblowers who are retaliated against for reporting antitrust violations.  It is largely modeled on the protections afforded securities whistleblowers under the Sarbanes-Oxley Act.  It would prevent companies from discharging, demoting, suspending, threatening, harassing or in any way discriminating against their employees for reporting to the government actual or potential antitrust violations.  And for those whistleblowers who are subject to such retaliatory conduct, the legislation would require the violating company to reinstate the whistleblower to his or her former position with back pay and special damages.

In his official statement introducing this draft legislation, Senator Leahy stressed the critical role whistleblowers play in government enforcement and the need to provide them with adequate protections for stepping forward:

Whistleblowers are instrumental in alerting the public, Congress, and law enforcement to wrongdoing.  In many cases, their willingness to step forward has resulted in important reforms and even saved lives.  Congress must encourage employees with reasonable beliefs about criminal activity to report such fraud or abuse by offering meaningful protection to those who blow the whistle . . . .

As Senator Leahy noted, the need for whistleblowers as a supplement to government enforcement efforts is especially important with the antitrust laws which the Supreme Court long ago recognized as “the Magna Carta of free enterprise.”  Given the bipartisan support of the bill, its authorship by the Chairman and ranking member of the Judiciary Committee, and that if follows the recommendation of the GAO, this bill is likely to have strong Congressional support.

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