Common Indicators of Collusion
The indicators used by the Antitrust Division in detecting antitrust violations are patterns of behavior or transactional records that suggest some sort of agreement among competing companies. Legitimate explanations for these patterns or records can provide valuable defenses to a charge of antitrust violation. For instance, one thing investigators look for to detect bid-rigging schemes is whether the same company always seems to have the low bid for a particular type of job. In a bid-rigging scheme, often competing bidders will collude to ensure the low bid is not the lowest price for which the job could be performed, fattening profit margins and usually giving some sort of kickback to the would-be low bidder. When the same company always wins the same sort of job, this could be a red flag to investigators that suggests the company has made an arrangement with a competitor that the competitor not undercut the company’s bid in exchange for a share of the profits. The defense to such a charge would be two-pronged: First, the defendant would argue that no such agreement ever existed; second, the defendant would offer evidence that explains why his company always wins a particular type of job. Such evidence could relate to the cost structure of the company in comparison to the cost structure of competitors, explaining why they are consistently able to be the low bid in this type of contract work.
Consistent low bidders are but one thing investigators look for in trying to detect bid-rigging schemes. If it appears that the same suppliers always submit bids and each company is taking a turn being the low bidder, this is an even stronger indication of collusion. And since the antitrust statutes specifically provide for the joining of additional parties related to the scheme, each supplier that submitted a bid could find themselves in the co-defendant’s seat (and in desperate need of a solid defense). Other indicators of collusion in bid-rigging schemes include fewer number of competitors submitting bids, higher bids than usual being submitted for the same job for no apparent cost reason, and dropping bid prices when new competitors submit their first bid.
Investigators also look for several common indicators of price-fixing schemes. Obviously, identical prices are the first thing to look for. But common experience tells you that many competitors have similar or matching prices on comparable products. Identical pricing becomes a red flag for investigators when coupled with one or more of the following:
- Prices match those of competitors for extended periods of time
- Identical prices were previously different
- Price increases do not appear to match cost increases
- Discounts that were historically given to customers are eliminated
Again, a reasonable explanation for the existence of one or more of these indicators can be a viable defense in the hands of an experienced attorney. Coupled with the defense that no agreement or conspiracy ever existed, such a defense will affirmatively disprove an element common to most antitrust crimes.
Other than bid patterns and historical industry prices, investigators also look for suspicious statements or behavior by vendors. For instance, a company might request a bid packet for themselves and have a competitor submit it in their absence. Perhaps the competitor is a trusted friend and there has been no agreement regarding bid suppression or inflation. On the other hand, this could indicate that one company prepared both bids and the other requested the packet itself to give the appearance of legitimacy. Other common suspicious behaviors and statements investigators look for include:
- Bid forms submitted by different competitors with identical handwriting
- Bid documents that have white-out on them or other indications of last-minute changes
- A bid submission by a company incapable of successfully performing the contract
- A reference to industry-wide price schedules by a salesperson
- A statement indicating inside information of competitors’ pricing
- A statement indicating that a particular customer “belongs” to a company
- A statement that a bid was a “courtesy” or “token” bid
Again, none of these indicators are conclusive proof of an antitrust violation, but are merely things prosecutors use to try to prove the required elements of the violation. If you have been charged with an antitrust crime, the first step is to ensure you hire the best representation possible. This means an experienced professional attorney who has expertise in the area of antitrust law. The second step is to make sure you tell your attorney everything that might be relevant to the situation so your attorney can craft the best defense possible tailored to your individual position. The attorneys at Parkman White, LLP specialize in criminal antitrust defense, and can help you fight antitrust and related charges in the most effective way possible.