By Robert Connolly   bob@reconnollylaw.com  LinkedIn

These are exciting times for someone (me) obsessed with the idea that there should be financial rewards available for individuals who blow the whistle on antitrust crimes.  Yesterday I submitted an article to a publication that will appear in the next day or two entitled, “When Fishing for Antitrust Cooperation, It’s Good to Have Bait.”  Today there are reports of new proposed legislation to be introduced by Senator Amy Klobuchar.  See e.g., Ryan Tracy, Wall Street Journal, February 4, 2021,  Klobuchar to Introduce Antitrust Bill Raising Bar for Technology Deals (here) (“The senator plans to introduce legislation that would bar companies that dominate their sectors from making acquisitions unless they can prove their deals don’t “create an appreciable risk of materially lessening competition’”); Lauren Feiner, CNBC, February 4, 2021, Klobuchar Unveils Sweeping Revamp of Antitrust  Enforcement (here) (“Sen. Amy Klobuchar, D-Minn., unveiled a sweeping antitrust reform bill on Thursday, setting a tough tone as she becomes chair of the Senate Judiciary subcommittee on antitrust.”)

Senator Klobuchar’s CALERA Bill Summary states, among other things, that the legislation:

  • would authorize $300 million increases to each agency’s annual budget, providing $484.5 million to the Antitrust Division and $651 million to the FTC.
  • would restore the original intent of Section 7 of the Clayton Act, which was designed stop anticompetitive mergers in order to address competitive problems in their “incipiency” before they ripened and caused harm.
  • defines several categories of mergers that pose significant risks to competition and shifts the legal burden to the merging parties to prove that mergers falling into those categories do not create an appreciable risk of materially lessening competition or tend to create a monopoly or monopsony.
  • creates a new provision under the Clayton Act to prohibit “exclusionary conduct” (conduct that materially disadvantages competitors or limits their opportunity to compete) that presents an “appreciable risk of harming competition.”
  • and to my delight: “establish a bounty system to reward criminal whistleblowers for providing evidence in antitrust cases resulting in the collection of a criminal fines.”

             This is sweeping proposed legislation with severable components. Criminal antitrust whistleblower legislation should be a high priority.  There are at least three trends that make this reform imperative:

            1)  As of September 1, 2020, roughly $2.59 trillion in new budgetary resources have been made available for federal agencies to respond to the pandemic. President Biden is seeking an additional $1.9 trillion.  This is an unprecedented level of federal spending and contracting.

2)  The Antitrust Division has established a Procurement Collusion Strike Force with an information page (here).   There is a “Report Possible Violations” heading with a link to “Report COVID-19 Procurement Collusion” and to “Report Other Procurement Collusion.”  Currently, other than being a good citizen, there is no incentive to offset the likely reluctance to “getting involved” in a federal investigation.

3) When fishing for whistleblowers, it’s good to have bait.  A potential whistleblower reward could reenergize criminal antitrust enforcement, See Cartel Capers, April 9, 2018, It’s A Crime There Isn’t a Criminal Antitrust Whistleblower Statute.

A whistleblower can currently file a qui tam suit under the False Claims Act and receive a financial reward if the government collects damages for bid rigging on federal contracts (see e.g. Cartel Capers, February 1, 2021 An Update on Criminal Antitrust Whistleblower LegislationThe FCA can be a useful tool for exposing cartels that rig bids on government contracts but it is no substitute for a criminal antitrust whistleblower rewards.  An FCA case is only an option when the government is the victim of collusion.  The false claims are invoices for payments submitted to the United States on contracts that were fraudulently obtained through bid rigging.  If  private contracts are rigged or prices fixed, there are no false claims submitted to the United States, and thus no potential FCA case. Also, even on government contracts, a potential whistleblower may have critical information to start an investigation but not enough, or the personal fortitude, to file a False Claims Act suit.  Lastly, whistleblower legislation can provide a level of confidentiality to a whistleblower that does not exist when a False Claims Act case is filed (while an FCA case is initially filed under seal, eventually the case, and the names of the plaintiffs, can become public).  It can be emotionally and financially draining to be a whistleblower.  Some financial incentive  for coming forward is needed.

The legislation envisioned by Senator Klobuchar is ambitious and passage is no sure thing.  But I hope all parties can rally around the need for criminal antitrust whistleblower rewards.

 

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