Bob Connolly firstname.lastname@example.org
In a prior post I listed a number of ideas I thought it would be useful for the Biden Administration’s Antitrust Division to consider when the new leadership is in place. The first item I wrote on was “A Call to Reopen the Atlanta and Dallas Field Offices.” Below is a short note on another initiative I hope the DOJ Antitrust Division will consider:
- Support Senator Klobuchar’s Proposed Legislation to Establish Criminal Antitrust Whistleblower Incentives
Senator Klobuchar has included in her sweeping antitrust reform proposal provisions to provide financial incentives to criminal antitrust whistleblowers. The Senator’s proposal is based on the very successful SEC whistleblower legislation which has become one of the SEC’s primary enforcement tools. See Senator Klobuchar Unveils Wide Ranging Antitrust Enforcement Legislation. Cartel Capers, Feb. 4, 2021.
I’ve written a great deal about the tremendous boost for cartel enforcement that would come from a criminal antitrust whistleblower incentive program like that of the SEC’s. see e.g., Cartel Capers, April 9, 2018, It’s A Crime There Isn’t a Criminal Antitrust Whistleblower Statute. I initially became interested in this subject because it seemed odd (and wrong) that there was a financial incentive for a whistleblower to expose a cartel against the government via a False Claims Act case but there were no financial incentives available for a whistleblower who wanted to expose a cartel that victimized private individuals. But the Klobuchar proposal would not only provide a financial incentive for whistleblowing on cartels generally, but it would also greatly enhance whistleblowing on bid rigging to the government for two reasons:
FCA filing v. Providing Information of Collusion to the Government
- Amount of Information Needed
A whistleblower can, and some have, filed False Claims Act cases alleging the government was the victim of a bid rigging scheme. The Korean Fuel Oil case is the latest example, of whistleblowers being well rewarded for coming forward, filing a case and exposing a bid rigging scheme. See Cartel Capers, http://cartelcapers.com/blog/south-korea-bid-rigging-whistleblower-case-and-related-antitrust-division-criminal-cases/. But it takes far more information to file a False Claims Act case than it does to provide a “tip” to law enforcement about collusion. It is likely there are many times the number of potential whistleblowers who could provide law enforcement with information about collusion than could file a False Claims case. Whistleblower attorneys know it is far easier to present information to the DOJ than to actually file an FCA Complaint. The information provided via a tip may or may not be acted on; the FCA filing requires a long and extensive and expensive commitment (as well as requiring far more actual facts supporting the allegation.)
I’ll give one example based loosely on an actual case I prosecuted when I was with the Division. An estimator observed that the boss had an after-hours meeting with competitors at his office. The next week, the estimator was told to raise by 10% a bid that he had prepared on a government contract. Surprisingly, his company won the bid even with the higher price and the competitors who were at the meeting were the losing bidders. The estimator could potentially seek an attorney to file a whistleblower FCA case based on these facts, but is thin and there may be no takers. Alternatively, if the estimator could have been a whistleblower by providing this information to the DOJ, the DOJ could review bids patterns, perhaps do a few drop in interviews, and conduct what the Antitrust Division calls a “preliminary investigation.” Further signs of collusion may prompt a grand jury investigation and if guilty pleas and fines eventually result, the whistleblower would get a reward. Bottom line, it is far more likely a potential whistleblower will file a tip with the DOJ than an actual FCA case because it requires less evidence and less of a long-term commitment. [The estimator in this case did not become a whistleblower–the facts were established without his cooperation].
2. Level of Anonymity Protection
There is another big advantage to filing a tip (as in the SEC whistleblower regime) than an FCA complaint. A whistleblower has a far greater chance of remaining anonymous by submitting a tip than if he actually filed an FCA case. An FCA complaint remains under seal while the government investigates but ultimately the identity of the whistleblower becomes revealed. Retribution is, quite reasonably, the biggest fear that holds potential whistleblowers back. Even if the whistleblower just filed a tip, anonymity can not be completely guaranteed because if there is a criminal trial, discovery obligations will require revealing the identity of the whistleblower. Like SEC whistleblower cases, however, it will be a rare circumstance where the whistleblower provides information that leads to an indictment–and the case goes to trial instead of pleading out.
To summarize, I believe a Klobuchar style criminal antitrust whistleblower incentive will not only provide for incentives for the first time for a whistleblower who provides information on collusion in the private sector, it will also greatly enhance to government’s ability to detect and prosecute collusion/bid rigging on government contracts. Whistleblowers would energize the government’s Procurement Fraud Strike Force. Whistleblower incentive legislation will also support President Biden’s emphasis on fighting corruption. See,
Thanks for reading.
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