DOJ and FTC Draft Merger Guidelines Reaffirm the Critical Role of Whistleblowers in Antitrust Enforcement

Whistleblowers provide crucial information, bring illegality to light, and right wrongs.  It is true when a nurse brings a False Claims Act case against a healthcare provider that defrauded the government by billing Medicare despite failing to provide the proper services to its patients.  And, as the DOJ and FTC reenforced in their recently released draft merger guidelines, it is just as true when a customer, supplier, worker, or other industry participant provides valuable information to antitrust enforcers investigating anticompetitive conduct or analyzing a merger.

On July 19, 2023, the DOJ and FTC released their 2023 Draft Merger Guidelines.  One issue present in the existing 2010 horizontal merger guidelines that the draft guidelines reemphasized was the importance of evidence provided by customers, workers, and other industry participants.  The 2023 draft guidelines provide that (i) customers “can provide a variety of information to the Agencies, ranging from information about their own purchasing behavior and choices to their views about the effects of the merger itself”; (ii) workers can provide valuable information about “wages, non-wage compensation, working conditions, the individualized needs of workers in the market in question, the frictions involved in changing jobs, and the industry in which they work”; and (iii) “other suppliers, indirect customers, distributors, consultants, and industry analysts” can also provide valuable information to the agencies when analyzing a merger.

Dr. Susan Athey, the Chief Economist for the Department of Justice, Antitrust Division, recently spoke to these points during her appearance on the August 1, 2023, episode of Ruled by Reason, a podcast from the American Antitrust Institute (slightly edited for clarity):

If you’re a worker or a customer and you’re seeing something coming down the road and you think that it feels wrong.  It feels like it’s going to create problems.  . . . [I]f you’re a business customer [or if] you’re a worker, . . . you can read these guidelines and say, “Hey, this guideline, that looks like exactly what’s happening in this merger.  Maybe I need to pick up the phone.  Maybe we need to get involved in this and express the potential harm that this may be causing.”

That same feeling motivates countless brave whistleblowers who provide information and bring illegality to light.

Federal antitrust law does not currently provide for financial awards for whistleblowers.  That will hopefully change in the future.  However, there are numerous whistleblower rewards programs that provide successful whistleblowers with financial payments for reporting fraud to the government.  One of the most prevalent is the False Claims Act, which allows individuals to bring lawsuits against those committing fraud against the government, and rewards successful whistleblowers with up to 30 percent of any government recovery.

And given that anticompetitive conduct can directly cause harm to the government — such as by overcharging on government contracts or reimbursement — there is a growing overlap between whistleblower law and antitrust law.  Unsurprisingly, we have seen a growing number of whistleblowers come to us over the last few years with information relating to anticompetitive behavior directly harming government purchasers.  They have typically been employees of the misbehaving company or competitors to the company being foreclosed from fairly competing.

For example, our firm represented a whistleblower who assisted the U.S. government in cases alleging bid rigging that artificially inflated prices on fuel contracts for U.S. military bases in South Korea.  Bid rigging is a per se antitrust violation under Section 1 of the Sherman Act, and it can also form the predicate for a False Claims Act case.  Ultimately, five different entities paid a total of $363 million in the largest False Claims Act antitrust recovery as well as the largest False Claims Act settlement involving bid rigging to date.  In November 2018, SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd. collectively agreed to pay $154 million, to resolve civil claims, and an additional $82 million in criminal fines for their involvement in the conspiracy the whistleblower exposed.  And in March 2019, the Department of Justice announced that two additional companies, Hyundai Oilbank Co. Ltd and S-Oil Corporation, would pay $75 million in criminal fines and $52 million to resolve these same False Claims Act and antitrust violations.  The whistleblower received an award of nearly $37 million, representing 23% of the False Claims Act payments.  Read more about that case here and here.

This is just one of many examples of an antitrust whistleblower coming to us to bring a False Claims Act case based on an underlying violation of the antitrust laws.  So if you have any information of potential antitrust violations that directly impact government purchases or Medicare/Medicaid and would like to speak to an experienced member of the Constantine Cannon whistleblower lawyer team, please do not hesitate to reach out and contact us for a free and confidential consult.  Not only do we want to hear from you.  The government does, too.

Read More

• Antitrust Today Blog
• Whistleblower Insider Blog
• I Think I Have a Whistleblower Case
• Contact Us Confidentially

Tagged in: Antitrust Enforcement, Importance of Whistleblowers,