EU Commission considers to introduce new “two-way” whistleblower program

The European Commission recently announced that it will contemplate in the upcoming months whether to introduce a new whistleblower program.

Under the Commission’s current “one-way” whistleblower program informants are already able to submit anonymous tip-offs on anti-competitive practices by undertakings. However, informants are often reluctant to disclose their names when blowing the whistle: they fear being discredited at and outside of work or even facing reprisals by business partners and competitors for reporting wrongdoings. In these cases in which informants do not reveal their identities the Commission cannot get back to them for further information it might need in order to initiate formal investigations and to establish an infringement of Articles 101 or 102 TFEU. Consequently, the Commission cannot conduct on-site inspections of the undertakings under suspicion.

A range of national competition authorities, among them the Danish Konkurrence- og Forbrugerstyrelsen and the German Bundeskartellamt (FCO), make already use of external providers which allow anonymous “two-way” communication. These whistleblower programs (which various private undertakings have implemented as well to detect compliance infringements in general) protect the identities of whistleblowers: the software allows informants to pass on their knowledge on anti-competitive practices anonymously to the competition authorities via a cryptic link, which is hosted by the external software provider. At the same time the program makes sure that competition authorities have – depending on the informant’s willingness to cooperate – access to the information they need in order to investigate potential competition law infringements. The cryptic connection enables the competition authorities to turn to the anonymous informants with questions in case of need for further information.

Even though anonymous tip-offs are of less evidential value than information provided by undertakings and individuals who have revealed their identities, they can be an effective tool in order to detect anti-competitive behavior. In that sense, whistleblower programs can complement leniency programs under which undertakings that participated (or still participate) in a secret cartel may receive full or partial immunity from fines if they produce sufficient evidence on the cartel activity or significant added value for the authority’s prosecution.  

Against that background, it might also make sense for the European Commission to set up a “two-way” whistleblower program. Yet, the Commission needs to take into account the risk that undertakings could abuse such tool, such as for defaming competitors. In any case, the Commission’s considerations show the increasing risk that undertakings might be exposed to investigations. Bearing this in mind it is all the more important that undertakings ensure that they have implemented effective compliance programs in order to avoid competition law infringements and subsequent investigations.