Whistleblowers are often the key to cracking cases where businesses collaborate illegally, forming cartels that violate antitrust laws by, for example, conspiring to fix prices. But better protection is needed for such whistleblowers, according to a Government Accountability Office report [1]that examined the effectiveness of the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA) since its enactment in 2004.

The Department of Justice has relied on a leniency program to help uncover and prosecute illegal activities like price fixing, market allocation, and bid rigging. A person or a company can avoid criminal charges, fines, and jail time if they are first to confess and cooperate with the investigation. Often people harmed by a criminal business cartel will file a civil suit negating incentives the organization had to report its illegal activity. As a result, ACPERA was enacted.

ACPERA was authorized in hopes that it would increase disclosures and aid in detection of cartels. It increased incentives for self-reporting and made penalties for getting caught more stringent to encourage self-disclosure of misconduct.

ACPERA increased maximum fines for antitrust violations from $10 million to $100 million, increased jail time from three years to 10 years, and provided relief from civil damages in exchange for satisfactory cooperation with the claimant, for example. Threats of jail time and corporate fines were the most motivating factors for people applying for leniency, according to GAO interviews.

But GAO examined cases involving ACPERA and found little change in the number of individuals or organizations applying for leniency after the changes. There were, however, a larger number of people coming forward to report previously unknown criminal conduct.

And since the wrongdoers aren’t coming forward any more than before under ACPERA, it’s third-party whistleblowers that become an important source for information on criminal activity. Unfortunately, the perks of coming forward as a whistleblower aren’t as great.

The current leniency program offers incentives for wrongdoers to report criminal cartel activity, but there are no incentives or protections for third-party informants, or whistleblowers, to report suspected wrongdoing. And then there’s the risk of retaliation from companies or individuals.

Some stakeholders interviewed for the report said whistleblower rewards might convince more people to come forward to report cartel activity. Others said increased information from whistleblowers could knock cartels off balance by increasing uncertainty and fear of detection among cartel members (although there were concerns that a reward could harm witness credibility in court and generate more false claims). But one thing nearly all stakeholders agreed on was that additional protection for whistleblowers would be needed to have any impact on fighting cartels.

“For the last 17 years, DOJ has relied heavily on its corporate and individual leniency programs to encourage wrongdoers to self-report such activity. However, innocent third parties may also report illegalities and in so doing may expose themselves to risk of retaliation. Without a civil remedy for those who are retaliated against as a result of reporting criminal antitrust violations, whistleblowers are currently unprotected and may therefore be hesitant to report wrongdoing to DOJ,” the report concludes. 

photo by by @jbtaylor [2] from flickr

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