What’s really behind these high prices? Shortage of supply or illegal collusion? DOJ launches new investigation into supply chain collusion

At a time when everyone — from automotive OEMs trying to get critical computer chips to consumers buying new devices — is frustrated with supply chain disruptions, the Justice Department is the latest federal partner to step in. in the fray to solve these problems. Yesterday, the Antitrust Division and the Federal Bureau of Investigation announced the formation of a joint initiative to deter, detect and prosecute illegal collusion under the guise of global supply chain disruptions.

While noting that this unprecedented period of resource constraints has brought out the ingenuity and expansion of many individuals and businesses, the announcement took aim at those who could exploit the supply chain crisis and collude to overcharge consumers, rig bids, or allocate markets or workers. The Antitrust Division is prioritizing existing investigations where “competitors may exploit supply chain disruptions for illicit purposes.”

A promising collaboration between the agencies, the announcement said the Division will investigate potential antitrust crimes in industries that are “particularly affected by supply disruptions” without identifying specific ones. And this initiative is not limited to the United States. The Antitrust division has created a working group with competition authorities in Canada, Australia, New Zealand and the United Kingdom to share information and better detect anti-competitive activities. He also urged any member of the public who suspects illegal activity to contact the government.

It is important to keep in mind that shortages (for example, of key components or transportation services) can lead to higher prices depending on legitimate market forces. It is not illegal for a company to unilaterally increase its prices in the face of growing demand. In many cases, companies should also not be deterred from collaborating with competitors to use existing resources more efficiently, or from pooling their purchasing needs to obtain better prices or faster service, all with appropriate antitrust guidance and safeguards. The recent announcement does not target such pro-competitive activities, but focuses on those seeking to use the current market turmoil to cover up illegal collusion. However, given the additional scrutiny, companies should ensure they document the unilateral decision-making process whenever they adjust business practices and pricing in light of supply chain disruptions. .

This is not the Antitrust Division’s first initiative involving inter-agency and cross-border collaboration. After launching the Procurement Collusion Strike Force in November 2019 with four other federal agencies, the strike force aimed at investigating, prosecuting and deterring antitrust crimes in public procurement has finally expanded its footprint to six partner agencies, more than 20 offices of US lawyers and international competition authorities.

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