New Whistleblower Program Provides Financial Rewards to Individuals Reporting Antitrust Crimes

Authors: Bernard A. Nigro Jr. (Washington, DC), Joshua Roth (New York, NY), Nathaniel Bronstein (New York, NY), Theresa Zieser (Washington, DC)

The DOJ Antitrust Division and the United States Postal Service have announced a whistleblower program that offers reporting parties financial rewards up to 30% of the recovered criminal fine.[1] The program aims to incentivize the reporting of antitrust crimes and "create a new pipeline of leads from individuals with firsthand knowledge of criminal antitrust and related offenses that will help [to] break down th[e] walls of secrecy."[2] This marks the first time that the Antitrust Division will offer rewards to those who report violations.[3] DOJ AAG Gail Slater noted that this program raises the stakes, saying "[i]f you're fixing prices or rigging bids, don't assume your scheme is safe - we will find and prosecute you, and someone you know may get a reward for helping us do it."[4]

Program Details

The whistleblower program provides a potential monetary incentive to "eligible whistleblowers" who "voluntarily" provide "original information" regarding a potential or actual "eligible criminal violation," which the USPS determines is a violation of law affecting the Postal Service, its revenues or property, and this information leads to a criminal fine of at least $1 million.[5]

• "Potential Monetary Incentive": There is a presumption that the total reward will be at least 15% (although it could be less) and up to a maximum total reward of 30% of the recovered criminal fine - DOJ plans to use several factors to determine the amount of the reward, including (i) how helpful and complete the information was, (ii) the extent to which the whistleblower participated in the violation reported, (iii) whether the information supported a criminal conviction, (iv) whether the information helped the government conserve resources and (v) whether the whistleblower faced any unique hardships as a result of their reporting. Interestingly, the whistleblower program permits paying awards to individuals who participate in criminal violations (provided that they do not lead or originate the violation, or coerce others to participate, as noted below).
  
  
• "Voluntary": Information must be provided prior to receiving a subpoena or civil investigative demand.
  
  
• "Original Information": Information must be derived from independent knowledge not already in the possession of DOJ or USPS. Like DOJ's antitrust leniency policy, this will put a premium on being first to blow the whistle and may encourage incomplete or erroneous reporting.
  
  
• "Eligible Criminal Violations": Means criminal violations of sections 1, 2 and 3 of the Sherman Act (and crimes committed to effectuate, facilitate or conceal violations of the Sherman Act); federal criminal violations targeting or affecting federal, state or local public procurement; and federal criminal violations targeting or affecting the conduct of federal competition investigations or proceedings.
  
  
• "Violation of Law Affecting the Postal Service": This prong requires "identifiable harm" to the Postal Service, its revenues, or property, but harm need not be material or pose any substantial detriment. Given the breadth of the Postal Service's operations, DOJ may be able to articulate a nexus between the Postal Service and many different types of "Eligible Criminal Violations." However, that will not always be the case, and the overall effectiveness of the whistleblower program may be limited if potential whistleblowers are uncertain about whether they will ultimately be eligible to receive an award.

Who Is Eligible to Report?

An "eligible whistleblower" is any individual who "voluntarily" provides "original information" regarding one of the "eligible criminal violations" (as defined above). There are, however, certain exceptions for eligibility. An individual is not eligible if they: [6]

1. coerced another party to participate in the illegal activity or were the leader or originator of the activity;
   
   
2. are a DOJ, law enforcement, or USPS representative, or a family member of a DOJ or USPS representative;
   
   
3. obtained the information through a communication that was subject to the attorney-client privilege or in connection with the legal representation of a client on whose behalf they or their employer is providing services;
   
   
4. obtained the information because they were (i) an officer, director, trustee, or partner of an entity and another person informed them of the misconduct or they learned the information in connection with the entity's process for identifying, reporting and addressing legal violations, (ii) an employee whose principal duties are compliance or audit related or they were employed or associated with a firm retained to perform the same kinds of duties, and the information is from those responsibilities, (iii) employed with a firm retained to investigate possible legal violations and the information is from that retention or (iv) an employee of a public accounting firm, if they obtained the information through an engagement; or
   
   
5. obtained the information illegally.

However, for the individuals detailed in (D) above, the exception does not apply if the individual (i) has a reasonable basis to believe that disclosure is necessary to prevent criminal conduct that is likely to harm national security, result in crimes of violence, result in imminent harm to patients in connection with health care, or cause imminent financial or physical harm to others, (ii) has a reasonable basis to believe that the relevant individual or entity is engaging in conduct that will impede an investigation of the misconduct or (iii) is someone described in (D)(i) or (ii) above (including internal and external audit and compliance personnel), and at least 120 days have elapsed since they provided the information to the entity's audit committee, chief legal officer, chief compliance officer or their supervisor, or at least 120 days have elapsed since they received the information, if they received it under circumstances indicating that the same positions were already aware of the information.[7]

Notably, regarding the carve-out for audit and compliance personnel noted above, there is no requirement that the company at issue have failed to take steps to investigate the report. Rather, audit and compliance personnel are eligible to receive a whistleblower reward (provided that other criteria are satisfied) once 120 days have elapsed regardless of how the report is being handled internally.

Further Incentive to Report

The whistleblower rewards program builds on DOJ's existing programs that encourage reporting of antitrust crimes. This includes DOJ's longstanding antitrust leniency program, which provides that individuals and corporations who report criminal antitrust activity can in some cases avoid criminal charges and trebling of damages in civil cases. Additionally, in 2024, DOJ announced programs where individuals can receive benefits for voluntarily disclosing certain corporate crimes.[8]

Conclusion

With a new incentive for whistleblowers to report potential crimes, companies should anticipate an increase in DOJ activity around potential violations. Companies should consider ensuring that adequate antitrust compliance policies, training and reporting systems are in place or discuss developing these with counsel if they do not yet exist. Additionally, when reports come in, it is important that companies address them as soon as reasonably possible, given the 120-day carveout for compliance and audit personnel to be able to report the potential violations and receive a payout. Among other things, this could include keeping the potential whistleblower apprised of the company's investigation and making self-disclosures to DOJ when warranted.

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