[co-author: Taylor Daly]
On Tuesday, December 8, the House of Representatives passed S. 2258, the Criminal Antitrust Anti-Retaliation Act, by voice vote, sending the bill to President Donald Trump’s desk. The measure, which unanimously passed the Senate in October 2019, aims to protect whistleblowers who report unlawful anticompetitive activities. While the Senate unanimously passed similar versions of the legislation in 2013, 2015 and 2017, the measure previously failed to pass the House.
The U.S. Department of Justice (DOJ) Antitrust Division has well-established corporate and individual leniency programs for those involved in criminal antitrust conduct. A corporation or individual that is the first to report a criminal antitrust conspiracy has the opportunity to receive full immunity for the reported antitrust conspiracy. The corporate leniency policy, in its present form since 1993, extends immunity to all current employees that cooperate with the Antitrust Division’s investigation.
Congress provided statutory incentives to participate in the leniency program in 2004 with the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA). Congress reauthorized ACPERA in 2010, and in June 2020 renewed and permanently extended ACPERA. ACPERA provides both a carrot and a stick to incentivize potential leniency applications. The stick comes in the form of increased penalties: with potential jail time for individuals increased from three to ten years, and maximum fines for antitrust violations increased from $10 million to $100 million for corporations and from $350,000 to $1 million for individuals. ACPERA’s carrot consists of reduced civil liability for successful leniency applicants. Those who receive leniency have the potential to avoid treble damages as well as joint and several liability in parallel civil actions.
The recently passed Criminal Antitrust Anti-Retaliation Act would extend whistleblower protections to private sector employees who report criminal antitrust violations to the DOJ. Under the measure, employers are barred from demoting, firing, or harassing an employee who reports criminal antitrust conduct.
Introduced by Sens. Chuck Grassley (R-IA) and Patrick Leahy (D-VT), the measure implements the recommendations of the Government Accountability Office (GAO) outlined in its report on Criminal Cartel Enforcement issued in July 2011. The Report concluded that without a civil remedy for individuals who are retaliated against for reporting criminal antitrust activity, whistleblowers are unprotected and likely deterred from reporting such activity. The GAO noted that Antitrust Division officials did not take a position on the issue.
In some respects, this bill seeks to fix a program that is not broken. The Antitrust Division’s leniency program has been, since it was revised in 1993, the Division’s single largest source of criminal cases. Virtually every international cartel prosecution undertaken by the Division in recent years can be traced, either directly or indirectly, to a leniency application. However, the current program does not protect individuals who bring allegations of wrongdoing to the attention of their companies or directly to the Antitrust Division. Such whistleblowers might have some protections under other federal laws like the False Claims Act, but not for all types of antitrust conspiracies.
Whether the legislation will be problematic from the perspective of potential corporate applicants to the leniency program remains to be seen. Effective corporate compliance programs create incentives for employees to report potential problems through the compliance department. This gives the company an opportunity to evaluate reported problems and gather information to assess whether there has been a violation. If a violation is likely, the company can bring the information to the Antitrust Division in its application for leniency. The whistleblower legislation, if signed by President Trump, could lead employees to be more willing to bring such violations to their employers, knowing that the new law would protect them from retaliation. That said, the legislation will also enable employees to bypass their corporate compliance departments, receive whistleblower protection, and report possible violations directly to the Antitrust Division. If individuals report antitrust conspiracies directly to the Antitrust Division, it could impact corporate reporting and leniency at the DOJ.
Sens. Grassley and Leahy lauded the House’s recent passage of the Criminal Antitrust Anti-Retaliation Act, urging President Trump to swiftly sign the legislation into law. Additional cosponsors of the bill include Senators Richard Blumenthal (D-CT), John Kennedy (R-LA), Chris Coons (D-DE), Amy Klobuchar (D-MN), Dianne Feinstein (D-CA) and Elizabeth Warren (D-MA).
Text of the legislation is available here.
