FTC Issues Warning Against Hindering Agency Investigations
- posted: Aug. 29, 2023
- Whistleblower Litigation
In June 2023, the Federal Trade Commission’s (FTC) Bureau of Competition issued a warning against enforcing any contract terms that can hinder its agency investigations. Certain contract terms like non-disclosure agreements, confidentiality clauses and “notice of agency contact” provisions “can impede the Bureau’s law enforcement investigations of potentially harmful mergers and conduct” and are thus “contrary to public policy, void, and unenforceable.”
The role of voluntary interviews
The Bureau of Competition issued a three-page legal analysis along with its statement, explaining that voluntary interviews with stakeholders are a key part of investigations into unfair methods of competition. These interviews usually happen as the Bureau reaches out to “people and businesses affected by the activity,” and are considered a critical tool to help investigators understand the practical dynamics and effects of alleged activity.
Contract clauses prohibiting voluntary interviews
Problems occur when investigation targets start imposing or enforcing certain types of contract terms to deter voluntary interviews with affected parties. For example, a company under investigation may ask potential interviewees to enter into a non-disclosure agreement to prevent them from speaking out. The Bureau has note this could “hinder or obstruct the voluntary interview process [and] impede the Bureau’s ability to fulfill [its] congressional mandate.”
There are three types of contract terms that have this “chilling effect.” Non-disclosure agreements prevent specified people from disclosing certain information, confidentiality agreements bind contracting parties from disclosing private information to non-contracting parties and notice-of-agency provisions require contracting parties to give notice when they have any contact with a government agency, or provide a summary of any discussions. These are considered by the FTC to be contrary to public policy and thus void and unenforceable.
If your employer or another party has tried to enforce any of these provisions in response to an FTC investigation, help is available. Reach out to a knowledgeable whistleblower attorney at Kardell Law Group to learn more about legal your options.
