Criminal investigations and enforcement programs ebb and flow – not necessarily because of a lack of initiative or some intentional slowdown. Cases take time to investigate and prosecute.
The Antitrust Division’s Criminal Enforcement program has always been consistent and successful, fueled by the corporate leniency program instituted in the 1990s and tweaked over the last 25 years. In the last few years, DOJ’s Cartel Enforcement program completed its largest and most successful prosecutions against the auto supply industry. With the end of that massive investigation and prosecution, there has been a resurgence in criminal enforcement focusing on the generic pharmaceutical industry and chicken supply.
Last year, the Antitrust Division announced a Government Procurement Antitrust Initiative to focus on antitrust enforcement in public procurement. The initiative, Procurement Collusion Strike Force, is focused on government procurement and grant and program funding. The PCSF ties together Antitrust Division prosecutors an 13 US Attorneys’ Offices, along with investigators from four major federal Inspector General Offices, and the FBI. With the new strike force, individuals and companies involved in government procurement or grants will face increased scrutiny.
Last year, the Antitrust Division unveiled its important compliance guidance, Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations. Companies involved in public procurement should adopt and implement robust corporate compliance programs.
Government contractors are required to certify they made independent price determinations without sharing any information with any competing bidder. A violation of these certifications can result in False Claims Act enforcement, breach of contract, criminal charges and suspension or debarment proceedings. The Antitrust Division has targeted procurement collusion in the past as well with successful results.
Government contractors are required to report to federal agencies and in turn DOJ suspected cartel activity. The Antitrust Division has been seeking aggressive civil damages for criminal violations committed by government contractors.
In a successful prosecution last year, the Antitrust Division secured guilty pleas from five South Korean oil companies for a bid-rigging scheme in supplying fuel to US bases in South Korea. The companies agreed to pay $156 million in fines and $205 million in civil settlements. The companies were suspended and required to enter into compliance agreements to avoid debarment.
Approximately one-third of the open criminal investigations involve government procurement. The Antitrust Division is promoting its enforcement program at a public website, providing training resources and identifying red flags of cartel schemes. In monitoring contractor competition and potential cartel activities, the Antitrust Division focuses on trends such as rotation of award winners among competing contractors, equal awards of work over time, a single contractor winning multiple contracts, subcontracts from the winning contractor to the losing contractors, a dwindling number of contractors participating in the bid process, and similar proposals submitted by individual contractors. To assist in uncovering such schemes, the PCSF uses data analytics programs.
Under the Antitrust Division’s Evaluation of Corporate Compliance Programs, companies have a strong incentive to implement a robust antitrust compliance program. Prosecutors will take into account the company’s implementation of a robust program that may have detected the collusion scheme. As a consequence, companies should implement robust policies and procedures, train employees on antitrust compliance in government contracting process, audit government contracts to identify any potential misconduct and compliance weaknesses, and ensure that your third-party partners are in compliance with antitrust requirements.