Division Continues Increased Focus On Procurement Collusion, Presents Strike Force To International Enforcers

Morrison & Foerster LLP - Government Contracts Insights

The following is an excerpt from “Quarterly Cartel Catch-Up: Recent Developments in Criminal Antitrust for Busy Corporate Counsel ‒ 2nd Quarter 2020.” To read the entire newsletter, please click here.

Division Continues Increased Focus on Procurement Collusion, Presents Strike Force to International Enforcers

Key Point: The Division has heightened scrutiny of anticompetitive conduct in the public procurement space in the first half of 2020.

On April 8, 2020, the Division announced that South Korea-based fuel supply company Jier Shin Korea Co. Ltd., and its president, Sang Joo Lee, agreed to pay $2 million to resolve civil antitrust and False Claims Act violations for their involvement in a bid‑rigging conspiracy that targeted contracts to supply fuel to U.S. military bases in South Korea. This resolution marks the conclusion of the Division’s investigation, in conjunction with the Civil Division, which previously resulted in settlements with six additional fuel suppliers.  The settlements have totaled over $205 million in civil penalties and an additional $150 million in criminal fines. In each case, the Division relied on Section 4A of the Clayton Act, which permits the government to recover treble civil damages when it is the victim of a violation of the antitrust laws.

The Division’s increased reliance on Section 4A is part of a broader focus on collusion in government contracting, which led to the creation of a Procurement Collusion Strike Force (PCSF) in November of 2019. On June 16, 2020, AAG Makan Delrahim presented on the PCSF at a meeting of the Organization for Economic Cooperation and Development’s (OECD’s) Competition Committee, which brought together enforcers from over 38 countries and seeks to promote cooperation and best practices on competition issues. Delrahim explained that the PCSF serves as an important tool in facilitating cooperation across multiple federal and state law enforcement agencies and has already shown signs of success, including several open grand jury investigations. Delrahim also expressed hope that the PCSF could serve as a model to other competition authorities seeking to fight more effectively bid rigging and other anticompetitive conduct in government contracting. We will continue to monitor developments from the PCSF and any future international counterparts, including efforts related to anticompetitive conduct resulting from the COVID-19 pandemic.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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