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DOJ’s New Antitrust Whistleblower Program: What It Means for Your Compliance Strategy
Earlier in July, the Department of Justice’s Antitrust Division launched a program to reward whistleblowers. What does this mean for you and your compliance program?
The Antitrust whistleblowers program continues a trend that many agencies and Inspectors General have adopted whistleblower hotlines allowing whistleblowers to share in any recovery derived from their reports. In the first of two posts on the whistleblower program, Jay Owen, Managing Director, describes why companies should take note, and why they should take steps to root out and stop actionable behavior internally before it rises to the level of external whistleblowing. Part two, discussing the specific antitrust compliance related implications of the DOJ’s announcement, will be available in a few days.
Whistleblowing has a long history in the United States, starting with two sailors who reported their commanding officer for torturing British prisoners of war during the Revolutionary war.[1] It was first meaningfully codified via the False Claims Act, signed into law by Abraham Lincoln in 1863, and protections have been extended multiple times, including the Whistleblower Protection Act of 1989, which protects federal employees who expose government illegality, waste, and corruption.
Recent laws have moved whistleblowing protections beyond the traditional scope of procurement fraud or government waste and instead allow recovery for uncovering activity that does not necessarily directly relate to federal funds. For instance, Congress enacted key reforms to the IRS whistleblower program for tax fraud and non-compliance in 2006 and 2019, and in 2010 the Dodd-Frank Act incentivized individuals to report violations of federal securities laws.
The Antitrust Division’s Whistleblower Rewards program thus represents a continuation of the trend towards expanding the scope of whistleblower encouragement, this time to uncover potential violations of the Antitrust laws. Although the scope of the program is somewhat limited[2], the MOU still represents an important continuation and expansion of whistleblower encouragement into additional violations of federal law.
If it is successful, the Whistleblower Rewards program will undoubtedly spur imitators and the expansion of whistleblowing rewards into additional areas of the law, making it essential for companies to continue to pursue aggressive compliance programs so that they don’t end up in DOJ’s crosshairs. Ironically enough, one of the most efficient ways to do this is for a company to set up its own internal whistleblower hotline, which effectively gives the company a head start on detecting many illegal behaviors before they catch the attention of enforcers.
What is an Internal Whistleblower Hotline?
At its most basic, an internal Whistleblower hotline is a mechanism whereby employees can anonymously report potential misconduct. It can be a voicemail system, an email system, or a submission form on a website. But the key element is that it is a confidential and secure way for employees to report misconduct without fear of retaliation, or potentially even retribution.
Almost as important as the hotline itself, a company must have a consistent workflow around any tips or information submitted to the hotline. There are four key elements to any such workflow:
- Reporting– The Company must regularly check the hotline and record the information therein. This may be someone within the compliance program who has this as part of their job responsibilities. Another option is to outsource the hotline to a third-party.
- Assessment– The second element is assessment of the complaint. In essence, the company must ask itself whether if true, would the allegations in the complaint be a violation of the law?
- Investigation– If the allegations in the complaint would represent a violation of the law, the company must investigate those allegations to determine if they are true and how persistent the issue is.
- Depending on the nature of the hotline itself, the company may be able to incentivize anonymous employees to come forward and assist in the investigation; for instance, anonymous complainants may be given a number to call and check on the status of the investigation.
- Resolution– After investigation, the company should take any appropriate action to prevent the issue from happening again, whether it is terminating an individual or installing a new control mechanism to prevent future violations or other action.
Why Should a Company Have one?
- A whistleblower hotline is an important part of creating a speak-up culture in which employees who witness problematic behavior raise the issue so it can be investigated. A whistleblower hotline can be an important part of this by ensuring anonymity and therefore preventing retaliation, which makes it easier for employees to come forward without personal risk.
- Creating this kind of culture allows companies to stop problematic behaviors before they escalate into patterns that might concern enforcers. In essence, a whistleblower hotline can provide real-time early warning signs of what is happening within a company so that investigations, training, and other remediation can occur before the behavior gets out of control.
- Early detection of concerning behaviors can protect a company’s reputation by allowing it to internally discipline employees before any violation becomes public. Early detection and punishment also shows the effectiveness of a company’s compliance program, an important factor that enforcers consider when weighing potential corporate criminal charges.
- While not explicitly required by law, some statutes strongly push companies towards whistleblower hotlines. For instance, the Sarbanes-Oxley Act requires public companies to establish procedures for the “receipt, retention, and treatment of complaints”, which can be handled by a properly designed whistleblower hotline.
Bottom Line
It remains to be seen how effective the Antitrust Division’s Whistleblower Rewards Program will be. Regardless of the program’s success though, there is a clear trend towards enforcers’ use of whistleblowing statutes to elicit case leads and deter illegal conduct. Internal corporate whistleblowing hotlines can be an important tool for companies to learn about potential violations before they become significant enough to catch the eye of DOJ or another enforcer. Companies should therefore consider including a whistleblower hotline as part of a robust compliance program. Additionally, engaging a third-party consultant like Guidepost Solutions to evaluate corporate compliance programs including implementing a hotline and/or other protocols is an important first step.
[1] The sailors, Samuel Shaw and Richard Marven, were jailed on criminal libel charges for their trouble, though they were ultimately exonerated.
[2] The Whistleblower Rewards program was created pursuant to a Memorandum of Understanding between the Postal Service and the Antitrust Division. Under that MOU, the Antitrust Division will utilize the Postal Service’s ability to reward whistleblowers who report matters that “affect[] the Postal Service” (39 USC 404(a)(7)), necessarily a subset of all potential antitrust crimes.
Jay D. Owen
Managing Director
Jay D. Owen is a seasoned legal professional with extensive experience in antitrust law. Most recently, he served as chief of the Defense, Industrials, and Aerospace Section at the Department of Justice’s Antitrust Division.
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