Peru launches Latin America's first reward program to fight cartels

04 Mar 2020 12:00 am

Peru recently initiated Latin America's first antitrust program aimed at fighting cartels by rewarding individuals who blow the whistle on anticompetitive conduct.

The National Institute for the Defense of Free Competition and the Protection of Intellectual Property, or Indecopi, will offer financial incentives for whistleblowers who provide information that helps the agency detect, prosecute and sanction cartels, the agency’s legal advisor, Arturo Chumbe, told MLex.

Chumbe, who helped draw up the program, said informants will receive up to 400,000 Peruvian soles ($130,000) if their collaboration proves effective and “especially valuable”.

“With the proper incentives to whistleblowers, assuring anonymity and providing a financial reward, we are able to send across the message that it will become more and more costly to participate in a cartel in Peru,” the legal advisor for Indecopi’s Commission for the Defense of Free Competition (CLC) said.

“We expect two major impacts with this program. First of all, a raise in the number of applicants and uncovered cartels. The second effect, which ... may take a little longer, is an improvement in the business environment, with more companies introducing compliance practices and more transparency,” Chumbe said.

Under the Peruvian Competition Act, informants must meet a series of criteria, including deadlines and participation in proceedings. The program focuses on cartels as they are the “most serious and difficult-to-detect violations,” the agency said.

Under Indecopi guidelines, whistleblowers’ identity and collaboration will be kept confidential and their safety ensured. “Any person interested in applying for the program can make prior and anonymous inquiries,” the guidelines say.

The whistleblower can “be either an employee or former employee who has deep knowledge of the company’s practices, such as an executive’s secretary, or maybe a family member of an executive from a cartelized company,” Chumbe said.

Whistleblowers can receive payments during the investigation and after sanctions are imposed by Indecopi. Those involved in cartels, however, can’t apply for the program, nor can lawyers, compliance officers of investigated companies, Indecopi employees or public servants in general.

Peru’s initiative was informed by those of other jurisdictions. “In the process of the issuance of the guidelines, we reviewed UK’s experience, South Korea’s, Pakistan’s, US,” Chumbe said.

Chumbe also said Indecopi’s leniency program has been successful and the reward program, initiated Feb. 24, is a complementary tool.

“From 2014 to 2019, we had 22 [leniency] applications. [This] allowed us to uncover bid-rigging schemes in huge markets, such as public education and maritime transportation,” he said. “The program has been a success and we expect the rewards program to follow that path. These programs are complementary to each other and give us more weapons to protect the market.”

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