For the first time, the Antitrust Division of the Department of Justice has offered financial rewards for whistleblower reports. The Antitrust Division in July announced a new whistleblower rewards program focused on postal-related operations and federal procurement. The financial reward may be between 15% and 30% of a criminal fine of at least $1 million following a conviction or deferred or non-prosecution agreement.
This is a major change in enforcement posture by the Antitrust Division. First established in 1978 and revised in 1993, the Leniency Program has been a cornerstone in the division’s enforcement efforts. The Antitrust Division Leniency Program offers non-prosecution protections to the first company or individual who voluntary self-reports criminal antitrust conduct and satisfies certain conditions.
The new whistleblower program introduces the need for more strategic choices and full consideration of the costs and benefits. This program also augments existing protections under the Criminal Antitrust Anti-Retaliation Act of 2020, which prohibits employer retaliation against employees who report suspected antitrust violations. While CAARA provides important legal protections, it doesn’t offer any monetary incentives.
Companies should update their compliance program consistent with recent updates, and include an overview of both the new rewards program and the existing leniency program, clarifying the differences in eligibility and incentive structures.
Here are key considerations for companies and individuals in deciding how to mitigate risk and decide which avenue may be best based on the legal issues.
What is the criminal risk of prosecution? A threshold issue is whether the company or individual has criminal exposure for the conduct. Leniency is only available if the applicant admits its “wrongdoing with candor and completeness.” If there is no criminal exposure, leniency is unnecessary. Both programs exclude applicants who coerced another party to participate or were the leader or originator.
The whistleblower rewards program may offer financial incentives, but it doesn’t provide protection from criminal prosecution. Whistleblowers may be observers, employees, or other witnesses. Participants in the unlawful activity should consider steps to obtain immunity or other non-prosecution assurances.
What is the scope of coverage? Key questions include who is covered by the report and how many people may seek coverage.
Corporate leniency offers the broadest protection. Type A—before an investigation opens—ensures current directors, officers, and employees won’t be charged criminally “if they provide timely, truthful, continuing, and complete cooperation to the Division throughout its investigation of the illegal activity.”
Type B—after an investigation has begun—is discretionary for current directors, officers, and employees and considered case-by-case. They must admit wrongdoing and fully cooperate throughout the investigation.
In contrast, individual leniency applies to individuals who self-report their participation where the division has no prior information, the individual provides full cooperation, and was neither a leader nor coercer. The whistleblower rewards program applies to reporting individuals.
How important is it for the initial report to be made anonymously? Whistleblower reports may initially be made “anonymously through an attorney.” The leniency program no longer permits anonymous initial applications, as it did in prior guidance during 2008 through 2017.
What is “timely” reporting? The leniency program rewards the first applicant for a marker, creating a race against co-conspirators. Hours can matter—“organizations have lost the race for leniency by a matter of hours and faced significant fines, and prosecution of their senior executives, as a result.”
Reports must be prompt after counsel or a compliance officer learns of the activity, and the applicant must prove timelinesss.
Under the whistleblower rewards program, the report must be “timely” and submitted before a formal demand, such as a grand jury subpoena, is served.
What is the criminal law nexus? Leniency covers Sherman Act violations and acts “in furtherance of” those violations.
The whistleblower rewards program applies to conduct affecting the US Postal Service, focusing on violations that affect the agency, “its revenues, or property.” Reports must provide “sufficient facts and evidence … that the Postal Service has suffered an identifiable harm.”
What cooperation is required? Leniency applicants must “in good faith” provide full cooperation in the division’s investigation and any resulting prosecutions. Failure may result in revocation of non-prosecution terms. For whistleblower rewards, one factor in the size of the award is “whether the whistleblower provided ongoing, extensive, and timely cooperation, such as explaining complex transactions, interpreting key evidence, or identifying productive lines of inquiry.”
Can multiple reports be made? Under the leniency program, the first to report and qualify is eligible for non-prosecution, Later applicants face prosecution.
The whistleblower rewards program allows multiple reports, but total shared rewards can’t exceed 30% of the recovered fine.”
Are the programs mutually exclusive? The two programs aren’t mutually exclusive. However, as previously noted, leniency requires an admission of participation in the illegal activity.
Does another whistleblower program apply? There is increasing emphasis on self-reporting and whistleblowing for criminal cases and regulatory enforcement. Each program is different with unique and overlapping requirements.
Other self-reporting and whistleblowing programs may apply, including the criminal division’s Corporate Whistleblower Awards Pilot Program, the SEC Whistleblower Program, the CFTC Whistleblower Program, the IRS Whistleblower Program, and the FinCEN Anti-Money Laundering Program, among others.
The Leniency Program and the new Whistleblower Rewards Program carry distinct costs and benefits. The new program expands opportunities for the division to uncover violations but increases the risk that an employee may report before the company learns of the conduct, triggering a federal investigation.
Careful consideration of the facts and legal consequences is required to choose the best approach. Delays can close off options, and early strategic legal advice and guidance is essential.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Author Information
Mark Krotoski is partner at Pillsbury Winthrop Shaw Pittman and leads the cartel enforcement and cyber disputes teams. He was chief of the Criminal Division in the US Attorney’s Office for the Northern District of California.
Vinny Sidhu is an attorney in Pillsbury’s antitrust & competition practice and has extensive experience with antitrust litigation, investigations, and regulatory matters.
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