Introduction
Antitrust laws aim to achieve two primary objectives. First, they prevent harm to competition in markets through regulations related to merger and acquisition control. Second, they penalize anticompetitive behaviors through ex post investigations of harmful strategies against competitors or consumers. Among these latter actions, collusion—the secret cooperation between competitors to raise prices, reduce supply, segment markets, or manipulate public procurement processes—is considered the gravest offense in the antitrust community.
Combatting Collusion: Strategies and Tools
To address this offense, authorities have developed strategies and tools that increasingly resemble those used in criminal proceedings. Two key instruments are particularly noteworthy: dawn-visit inspections, which involve surprise visits to companies’ facilities to gather documentary evidence of cartel activities, and leniency or clemency provisions. These allow participants in a collusive agreement to join a protected witness program under confidentiality conditions, in exchange for providing substantial information that enables the investigation and dismantling of the cartel. In Mexico, those seeking leniency receive significant reductions in monetary sanctions and immunity from criminal prosecution, though not in civil matters.
New Anti-Cartel Policy in the U.S.: Rewarding Whistleblowers
In the U.S., a new avenue has been introduced to bolster anti-cartel policy: a program offering monetary rewards for exposing criminal violations of competition laws. Although various programs exist that incentivize individuals providing information on federal crimes, this is the first time the Department of Justice offers monetary rewards to individuals. The U.S. Postal Service will collaborate in implementing this program.
Under the program, whistleblowers can receive a discretionary economic benefit of 15-30% of recovered fines, provided the fines exceed one million dollars and the whistleblower presents specific, credible, and timely evidence of the illegal conduct.
Implications and Recommendations for Businesses
Businesses operating in the U.S. and their subsidiaries in other countries should strengthen their compliance policies, addressing the following aspects: (I) establishing a system for reporting illegal conduct; (II) creating internal incentives to report competition law violations; (III) requiring compliance officers to report regulatory breaches; (IV) implementing disciplinary measures for failing to report such breaches; (V) creating mechanisms and incentives for employees to report competition law violations without fear of retaliation; and (VI) considering the impact of confidentiality agreements or other company measures on the decision to report.
Mexico’s Recent Reform: Opportunity for Compliance Review
Mexico’s recently approved reform to the Federal Economic Competition Law allows companies to submit their compliance programs for review by the upcoming National Antimonopoly Commission. This presents an opportunity for economic agents to have their programs assessed by the authority, reducing risks from non-compliance. The potential future adoption of a whistleblower policy is a risk that requires immediate attention.
Key Questions and Answers
- What is the purpose of the new anti-cartel policy in the U.S.? The policy aims to encourage individuals to report criminal violations of competition laws by offering monetary rewards.
- How much can whistleblowers receive under this program? Whistleblowers can receive a discretionary economic benefit of 15-30% of recovered fines, provided the fines exceed one million dollars and they provide specific, credible, and timely evidence.
- What should businesses do to adapt to these changes? Businesses should strengthen their compliance policies, addressing aspects such as reporting systems, internal incentives, officer responsibilities, disciplinary measures, employee protections, and the impact of confidentiality agreements.
- What opportunities does Mexico’s recent reform present for businesses? The reform allows companies to have their compliance programs reviewed by the National Antimonopoly Commission, potentially reducing risks from non-compliance and preparing for future whistleblower policies.
