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The Dawn of Antitrust Whistleblowing

Posted  June 9, 2021
By Marlene Koury, Kristian Soltes

Whistleblowing is crossing paths with antitrust enforcement. Expect the trend to accelerate.

In the past few years, whistleblowers have become increasingly instrumental in detecting and addressing corporate wrongdoing. Increased protections and financial incentives have encouraged whistleblowers to expose corruption and other wrongdoing, much of which would otherwise often go unnoticed. This phenomenon is also altering the way litigators originate and conduct their cases. Suddenly, collaboration between non-whistleblower litigators and whistleblower attorneys has become critical as the industry reckons with the interdisciplinary expertise required to litigate these cases.

This reality is now hitting the field of antitrust, and we can expect that trend to accelerate during the Biden administration. Congress recently passed anti-retaliation provisions that protect whistleblowers for exposing antitrust violations, and robust financial incentives to encourage these actions are likely to follow. Since antitrust violations are often the result of backdoor communications and decisions that are difficult to detect by outside observers, enforcement of the antitrust laws through whistleblower activity in the field is particularly crucial. And if these whistleblowers are properly incentivized, the U.S. may see a landslide of cases exposing otherwise undetectable antitrust violations. Welcome to the dawn of antitrust whistleblowing.

From Protections to Rewards

In December 2020, the U.S. enacted the Criminal Antitrust Anti-Retaliation Act (CAARA), protecting from retaliation whistleblowers who expose criminal violations of the antitrust laws. It followed several attempts (under both Democratic and Republican administrations) to protect antitrust whistleblowers over the last decade, all of which failed. The bipartisan passage of this act, especially in an era marked by intense political polarization, only underscores that the trend of encouraging antitrust whistleblowing may be here to stay, regardless of party politics.

The pressures are rising to not only protect antitrust whistleblowers from retaliation, but give them a financial incentive to expose the wrongdoing in the first place. Industry experts have been quick to point out that without financial incentives, whistleblowers are much less likely to take the big step of exposing antitrust violations. And if recent history is any guide, it is financial rewards that will truly and significantly spur whistleblower activity. In fact, other government programs that have permitted financial recovery for whistleblowers have been overwhelmingly successful at both exposing and deterring wrongdoing. For example, the SEC, CFTC, and IRS have all adopted systems to award whistleblowers financial incentives, resulting in a significant uptick of cases and helping the federal government recover billions of dollars. Indeed, over half a billion dollars has been awarded to SEC whistleblowers under that agency’s program. Importing these mechanisms into antitrust can yield similar results.

CALERA and Beyond

In February 2021, Senator Amy Klobuchar introduced the Competition and Antitrust Law Enforcement Reform Act (CALERA), a comprehensive antitrust reform bill that would not only strengthen antiretaliation protection for whistleblowers but also provide criminal antitrust whistleblowers a reward of up to 30% of the criminal fines imposed on the wrongdoer. If passed in its proposed form, the bill would not only encourage increased whistleblower activity in the field of antitrust but also greatly expand what constitutes an antitrust violation, resulting in more employees blowing the whistle on more types of corporate wrongdoing. Litigators should be prepared for this mushroom effect.

There is much reason to believe that the bill will fare well in its journey to becoming law. Bipartisan interest in comprehensive antitrust reform has already been made evident in the passage of CAARA. And perhaps more important, the debate over antitrust enforcement is no longer relegated to the backrooms of litigators, economists, and jurists. The American public now recognizes the importance of antitrust enforcement, particularly as questions of how to regulate the enormous power of big tech have entered everyday public discourse. In the words of renowned antitrust professor Carl Shapiro, “antitrust is sexy again,” and there is no indication that it will stop being sexy any time soon. It is not surprising that the Biden administration is being staffed by antitrust critics of big tech such as Tim Wu and Lina Khan.

These realities also show that the sanguinity of antitrust whistleblowing does not hinge on the passage of CALERA. With or without the proposed law, recent well-publicized antitrust cases are likely to further mark this era as a watershed moment for antitrust whistleblowing. As a prime example, a recent bid-rigging case involving fuel supply contracts for the U.S. military was brought by a whistleblower under qui tam provisions of the False Claims Act, resulting in the largest-ever bid rigging settlement and a significant monetary award to the whistleblower, to the tune of $36 million. Eric Havian, a lead attorney in the case, remarked, “I think this kind of bid-rigging goes on all over the world and so when the word gets out that there’s a reward for revealing this kind of widespread activity, I think you’re going to see a lot more of these cases.” Indeed, the confluence of trends—from the public to the legislature to the courts—all point to increased antitrust enforcement through whistleblowing.

Practical Takeaways

The dawn of antitrust whistleblowing will shift how litigators approach antitrust cases over the next four years and beyond. Antitrust attorneys are already collaborating with whistleblower attorneys not only on legal developments, but also on how to market across practices, how to liaise with government entities, and how to encourage and foster client relationships. They should also be developing secure and simple channels that encourage potential whistleblowers to report. After all, those privy to antitrust wrongdoing may equivocate about whether to blow the whistle, and unnecessary complexity can be a deterrent. Firms would also be wise to closely follow antitrust criminal investigations and prosecutions, harbingers of the high-profile civil cases that will rise in their wake. In short, successful antitrust litigators should be proactively monitoring and responding to these changes in the industry. Antitrust whistleblowing is here to stay, and litigators will either embrace the interdisciplinary new world, or risk being left litigating on an island.

This article was originally published by the Antitrust Litigation Committee of the American Bar Association, and is included here with their permission.

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Tagged in: Antitrust Enforcement, Antitrust General, Importance of Whistleblowers, Retaliation, Whistleblower Eligibility, Whistleblower Rewards,