Background

The Department of Justice has announced a new initiative to deter, detect, and prosecute companies colluding to overcharge consumers under the guise of supply chain disruptions.

A DOJ press release notes that economies around the world have faced significant challenges caused by supply chain disruptions resulting from the COVID-19 pandemic. Transportation constraints, disruptions to routine business operations, and difficulty obtaining raw materials have all led to increased costs of production and shipment, which in turn have resulted in higher prices for consumers. A DOJ official said these disruptions have “created an opportunity for criminals to fix prices and overcharge customers.”

In response, the DOJ’s Antitrust Division and Federal Bureau of Investigation “will investigate and prosecute criminal violations of the antitrust laws, including agreements between individuals and businesses to fix prices or wages, rig bids or allocate markets.”

An American Shipper article said this initiative will extend to the shipping industry, where the price of transporting cargo containers has skyrocketed over the last several years. “Many buyers of ocean transportation say the carriers have manipulated tight capacity during the pandemic through deferred and canceled sailings, and other measures, to drive rates up, resulting in record profits estimated to top $200 billion last year,” the article said. Further, “a combination of antitrust immunity, a dozen years of consolidation that has left eight major carriers partnering in three alliances, and an expansion into broader logistics services and control of data has enabled the largest carriers to dominate the market.”

As part of the DOJ’s new initiative, the Antitrust Division is prioritizing any existing investigations where competitors may be exploiting supply chain disruptions for illicit profit and is undertaking measures to proactively investigate collusion in industries particularly affected by supply disruptions. It has also formed a working group with its partners in Canada, the United Kingdom, Australia, and New Zealand to develop and share intelligence, utilizing existing international cooperation tools, to detect and combat global supply chain collusion.

Sandler, Travis & Rosenberg is continuing a campaign to advocate with federal regulators and lawmakers on solutions to the supply chain crisis. For more information on this campaign and how to participate, please contact Ned Steiner at (202) 730-4970 or via email.

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