The US DoJ announces a joint initiative with the FBI to deter and prosecute those who would exploit supply chain disruptions due to COVID-19 to engage in collusive conduct

On 17 February, the Department of Justice (DOJ) Antitrust Division (Antitrust Division) announced that it is launching a joint initiative with the Federal Bureau of Investigation (FBI) to “deter and prosecute those who would exploit supply chain disruptions to engage in collusive conduct.”

In a statement announcing the initiative, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division said that the “lingering challenge” of supply chain disruptions stemming from the COVID-19 pandemic has created opportunities for price-fixing that has resulted in increased prices for consumers. Quesada pledged to work with law enforcement partners to investigate activity that violates the antitrust laws. Assistant Attorney General Jonathan Kanter echoed this sentiment, stating that the “Antitrust Division will not allow companies to collude in order to overcharge consumers under the guise of supply chain disruptions.”

A joint Antitrust Division/FBI press release1 announcing the initiative notes that recent global transportation constraints, disruptions to routine business operations and increased difficulty in obtaining raw materials stemming from supply chain disruptions caused by the pandemic have led to increased costs of production and shipment and higher prices for consumers. Expressing concern that these circumstances may be exploited by bad actors to engage in illegal collusion, the FBI and the Antitrust Division will focus on investigating potentially anticompetitive activity in a variety of industries “particularly affected” by supply chain disruptions “ranging from agriculture to health care.” The Antitrust Division will prioritize any existing investigations where competitors may be engaging in efforts to exploit supply chain disruptions to increase profits, and has committed to working closely with the public, business community, and federal agencies to investigate and prosecute criminal antitrust violations including illegal price-fixing and wage-fixing agreements, bid-rigging, and market allocation.

In addition, the Antitrust Division has formed a working group with its international antitrust enforcement partners in Australia, Canada, New Zealand, and the United Kingdom to target global supply chain collusion. The working group intends to share intelligence and utilize existing international cooperation tools to “detect and combat collusive schemes.” Foreign companies therefore should be aware that collusion impacting US consumers, including the US government, can be prosecuted regardless of where the collusion occurs. Moreover, collusive conduct that impacts the US government abroad (for example, US military bases and embassies abroad) may be prosecuted in the US.

Next steps

Now, more than ever, companies with business affected by recent supply chain disruptions should be especially mindful of complying with the antitrust laws or risk defending costly criminal antitrust investigations. Companies with questions or concerns about the Antitrust Division/FBI’s enforcement initiative should consider contacting experienced antitrust counsel to assess their current risk profile and compliance program.

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Authors

  • Hogan Lovells (Washington)
  • Hogan Lovells (Washington)

Quotation

Kathryn Hellings, Daniel E. Shulak, The US DoJ announces a joint initiative with the FBI to deter and prosecute those who would exploit supply chain disruptions due to COVID-19 to engage in collusive conduct, 17 February 2022, e-Competitions February 2022, Art. N° 105245

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