DOJ Makes First Award Under Recently Launched Antitrust Whistleblower Program

By the Constantine Cannon Whistleblower Team
Last Thursday (January 29), the Department of Justice (DOJ) Antitrust Division announced a $1 million reward to a whistleblower who provided information that led to EBLOCK Corporation resolving criminal antitrust and fraud charges and paying a $3.28 million criminal fine. It is DOJ’s first award under its recently launched Antitrust Whistleblower Rewards Program.[1] DOJ did not provide the identity of the whistleblower, staying true to its strict policy of maintaining the confidentiality of its whistleblowers.
What Is The Antitrust Whistleblower Rewards Program?
DOJ launched this program with the Postal Service last July to “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.”[2] It is the only rewards program specifically targeting antitrust whistleblowers and followed years of failed efforts by Congress to pass any kind of antitrust whistleblower legislation.
As we previously posted, the program generally covers criminal antitrust violations under the Sherman Act (15 U.S.C. § 1), which prohibits horizontal per se unlawful agreements such as price fixing, bid-rigging, and market allocation schemes. Eligible whistleblowers are those who voluntarily provide original information leading to a criminal conviction and fine of at least $1 million. In addition, the Postal Service must find the criminal conduct in some way affected the Postal Service, its revenues, or its property.
The information the whistleblower provides must come from the whistleblower’s independent knowledge, not from publicly available sources. That knowledge can come from the whistleblower’s first-hand experience in business or social interactions, or from the whistleblower’s independent analysis of public or private data. The amount of any award will be 15-30% of the criminal fine recovered, but ultimately in DOJ’s discretion.
What Was the Nature of EBLOCK’s Antitrust Violations?
EBLOCK Corporation offers an online auction platform for used vehicles. According to the Government, EBLOCK conspired with a competing used car online auction platform “to suppress and eliminate competition for used vehicles sold” on the competing company’s platform. The essence of the scheme allegedly involved:
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- Improperly sharing bidding information and agreeing on the maximum amount to bid for vehicles to be auctioned.
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- Sharing confidential bidding information of other buyers and sellers on the auction sites.
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- Maintaining a shared inventory of vehicles purchased pursuant to the bid-rigging scheme and coordinating the relisting of those vehicles.
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- Placing shill (or fake) bids to artificially increase the prices paid by legitimate buyers.
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- Misrepresenting the number and identity of fake bidders during the online auctions by placing shill bids under the names of actual auto dealerships without their consent.
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- Pooling and then sharing in the profits from the scheme.
In addition, various documents in support of the scheme were sent by U.S. Mail, which met the requirement under the whistleblower program that the alleged violation affected or harmed the Postal Service. This comes from the odd way in which the program was authorized, which was not through Congress but from the pre-existing authority of the Postal Service to issue whistleblower awards.
Specifically, under 39 U.S.C. § 404(a)(7), the Postal Service may “pay 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.” As we previously explained, that awards provision seems to be the only reason DOJ is partnering with the Postal Service and why awards made under the program must flow through the Postal Service.
What Does The Program Mean For Antitrust Whistleblowers?
In announcing this inaugural antitrust whistleblower award, the Government went out of its way to praise the whistleblower involved and trumpet the vital role of whistleblowers more broadly in helping the Government police antitrust violations. DOJ Antitrust Division Criminal Chief Omeed Assefi underscored the “indispensable role” of whistleblowers in this regard:
“Whistleblowers serve as the Justice System’s greatest disinfectant against criminal antitrust conspiracies. . . . This $1 million reward not only recognizes a whistleblower for bravely stepping forward to report crimes to the Antitrust Division, but also underscores the indispensable role whistleblowers will continue to play in the Division’s criminal enforcement program.”
Acting Assistant Director Mark Remily of the FBI’s Criminal Division was in complete accord, highlighting the “critical role” whistleblowers play “in helping law enforcement to identify and investigate a wide variety of criminal activities.” He credited the whistleblower who received the award with helping dismantle “a criminal antitrust conspiracy, that if unreported, would have continued to harm American consumers who were unknowingly overpaying for automobiles.”
What this means for antitrust whistleblowers is that the Government very much wants to hear from you and is willing to pay you handsomely for coming forward. The million-dollar award is relatively small compared to the billions of dollars DOJ has paid to whistleblowers under the False Claims Act, the oldest and most prolific of U.S. whistleblower rewards programs. However, the award accounts for roughly 30% of the Government’s total recovery in the matter, signaling the Government’s willingness to be generous in rewarding antitrust whistleblowers under this new program.
What Other Options Are There for Antitrust Whistleblowers?
Constantine Cannon whistleblower partner Dan Vitelli, who specializes in both antitrust and whistleblower law, believes this award is a strong signal of the Government’s firm commitment to the antitrust whistleblower program. According to Vitelli, “it’s not just that the Government made a 30% award to the whistleblower, the upper limit of what the program allows. It’s also how DOJ promoted the award and the critical role whistleblowers play in helping the Government go after misconduct.”
Vitelli expects this award will provide a strong incentive for other antitrust whistleblowers to step forward and that we will see additional awards coming out of this program soon. “Clearly that is what the Government is hoping to encourage with the size and promotion of the award,” Vitelli says.
But Vitelli notes that this new program is not the only path for antitrust whistleblowers. “The False Claims Act also provides a well-worn path for whistleblowers with information of antitrust-related misconduct that financially harms the Government.” According to Vitelli, “This would encompass bid-rigging, price-fixing, market allocation schemes, or any other competitive misbehavior that impacts the price, quality, or choice of the Government’s purchase of goods and services.”
Constantine Cannon Has Substantial Experience Representing Antitrust Whistleblowers
Constantine Cannon has substantial experience representing antitrust whistleblowers under both the Antitrust Whistleblower Program and the False Claims Act. Indeed, the firm was responsible for securing the largest antitrust False Claims Act recovery ever. In that case, the firm represented a whistleblower alleging several Korean oil companies engaged in a bid-rigging scheme to artificially inflate the price the U.S. military paid for fuel contracts for its bases in South Korea. Ultimately, the defendants paid a total of $363 million to resolve these allegations and the firm’s client received a whistleblower award of roughly $37 million.
Outside its whistleblower work, Constantine Cannon also is one of the country’s pre-eminent antitrust law firms, responsible for two of the largest antitrust settlements ever. In one of them, the firm secured a $3 billion settlement — in addition to injunctive relief valued at tens of billions of dollars — as lead counsel for a class of millions of retailers alleging Visa and MasterCard violated the Sherman Act by illegally tying the acceptance of Visa/Mastercard credit cards to the acceptance of their debit cards.
All in, Constantine Cannon’s representations have led to more than $1 billion in government and whistleblower recoveries and an additional $5 billion for the firm’s other clients. If you would like to learn more about the firm’s successes, the Antitrust Whistleblower Rewards Program, the False Claims Act, or what it means to be a whistleblower, please do not hesitate to contact us. We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.
Speak Confidentially With Our Whistleblower Attorneys
Sources:
[1] See https://www.justice.gov/opa/pr/antitrust-division-and-us-postal-service-award-first-ever-1m-payment-whistleblower-reporting.
[2] See https://www.justice.gov/opa/pr/justice-departments-antitrust-division-announces-whistleblower-rewards-program.
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