New Anonymous Whistle-Blower Tool Launched By The European Commission

Businessman in black suit hiding face behind sign whistle blower New Anonymous Whistle-Blower Tool Launched By The European Commission

On March 16, 2017, the European Commission (“EC”) introduced a new tool to make it easier for individuals to alert the EC about competition law violations, mainly secret cartels, while maintaining the anonymity of the whistle-blowers.

The EC presented the objectives of the new tool (I) and how it works (II); this tool, which is not new in Europe, leaves several questions unanswered (III).

I. Objectives of the New Tool

The EC reminded that, until now, most cartels have been detected through its leniency programme, which remains in place. With this new tool, the EC wants to encourage individuals, and not only companies, to report their suspicions of anticompetitive practices. According to the EC, the new tool complements the leniency programme by:

  • increasing the likelihood of detection and thus deterring undertakings from entering or remaining in cartels or carrying out other types of illegal anti-competitive behaviour;
  • contributing to the success, the celerity and the efficiency of EC’s investigations; and
  • improving the preciseness and reliability of the information in possession of the EC.

II. How Does the New Tool Work?

The fundamental attribute of the new tool is its protection of anonymity. Indeed, the new tool is conceived as an online platform where any individual can insert any relevant information and send it to the EC through a specifically-designed encrypted messaging system.

The platform has been created by an external service provider–SecWay, a French company specialised in cyber security–which handles the platform as an intermediary. So, the EC does not monitor the platform itself. Concretely, SecWay relays only the content of received messages without forwarding any metadata that could be used to identify the individual providing the information.

The whistle-blower can activate an option of requesting the EC to reply to its messages. The tool allows the EC to respond to the whistle-blowers (without knowing who they are) in order to ask them to provide clarifications and details. Finally, at their discretion, the whistle-blowers can disclose their identity by activating another option.

III. Even though the Concept Is Not Entirely New in Europe, the New Whistle-Blower Mechanism Leaves Several Questions Unanswered

The same anonymous whistle-blowing concept is already implemented by the Bundeskartellamt in Germany (with a very similar platform as the EC’s but managed by a German company, Business Keeper AG), by the Competition Council in Romania and by the Competition and Consumer Authority in Denmark (with the same SecWay platform).

In the UK, the Competition and Markets Authority (“CMA”) uses a similar tool to allow individuals to report cartels. However, the UK system does not provide for full anonymity. The whistle-blower’s identity is not disclosed to third parties but it is known by the CMA. Another difference is that the CMA can offer the whistle-blowers a financial reward up to £100,000 (in exceptional circumstances).

The introduction of the new tool may indicate that the EC considers that there are a number of cartels that are not disclosed through its leniency programme. Several questions remain open at this stage.

The first one is how the EC will detect false denunciations made by people who are seeking to destabilise a company or to cause harm to individuals at a company. Assessing the accuracy of information received anonymously, through a third-party service provider, is more difficult than when the EC receives information in conversations conducted on a no-names basis (which is the current procedure). There is a real risk that the EC will launch unwarranted investigations on the back of information obtained through the new tool. The EC should be transparent and report regularly on the number of tip offs that it has received and how many informal and formal investigations it has opened based on such information. If the tool results in meaningless investigations, which often impose a heavy burden on the investigated companies, the EC should reassess the value of the tool, or consider compensating innocent companies for damage caused.

The second one is whether the EC will be able to include anonymous information in the files while remaining compliant with EU law defence rights.

The third one is whether, as it often happens, the EC innovation will encourage European national competition authorities to adopt the same kind of mechanism.