What are the two greatest investments for most Americans? Homes and vehicles. And the FBI is working alongside our partners in the Antitrust Division at the Department of Justice (DOJ) to make sure consumers aren’t defrauded by artificial increases in car prices or deflation of home values as a result of antitrust practices.For example: in September, a Japanese auto parts company with operations in the U.S.—along with three of its executives—agreed to plead guilty in federal court in Detroit to a price-fixing and bid-rigging conspiracy with other companies involving the sale of parts to automobile manufacturers. The victims in this case? Other auto parts dealers who were shut out of the bidding process, car manufacturers who paid higher prices for auto parts, and ultimately, American car buyers who paid more for the price of a car.
A second example: As of October, 18 real estate investors have pled guilty in connection with two separate conspiracies to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in Northern California. When real estate properties are sold at these auctions, the proceeds pay off the mortgage and other debt attached to the property. These conspiracies cause the homes to be sold for less than they would go for at a fair and competitive auction. This lower price directly affects anyone in that neighborhood trying to sell their home.
Of course, antitrust violations go beyond auto parts and real estate. Recent criminal antitrust investigations have involved a number of industries, including freight-forwarding, concrete-mixing, optical disks, refrigerant compressors, and electronic LCD panels.
Antitrust activities raise prices and suppress competition, hurting businesses who play by the rules as well as consumers who pay more for products or services. And increasingly, profits from antitrust conspiracies to go foreign companies, which can impact the ability of U.S. businesses to remain competitive in the world market.
DOJ’s Antitrust Division is charged with civil and criminal enforcement of federal antitrust laws, and FBI investigators work jointly with DOJ antitrust prosecutors at several regional DOJ antitrust offices. In the mid-1990s, that partnership really took off when we embarked on a highly aggressive antitrust enforcement program, focusing resources on long-range investigations involving national and international conspiracies that greatly impacted U.S. commerce.
Antitrust violations include:
■Price-fixing—when competitors agree to raise, lower, or maintain the price at which their products or services are sold;
■Bid rigging—an agreement that competitors work out ahead of time about who’s going to be awarded a contract and at what price; and ■Market allocation—involving agreements among conspirators on how to divvy up market share, either geographically or by customer.
To conduct antitrust investigations, we use the full arsenal of investigative tools available to us in all criminal cases, including the execution of search warrants on businesses, interviews, analysis of hard copy and electronic records, court-authorized electronic surveillance, and cooperating witnesses.
Importance of international cooperation. A vital piece of our antitrust effort is increased support and assistance from our foreign law enforcement partners—the Department of Justice currently has in place antitrust cooperation agreements with approximately 10 countries, including Russia and China.
These agreements come in very handy when our antitrust investigations lead us overseas….which happens nearly every day as more companies expand their operations worldwide.
Tips for Spotting Antitrust Schemes
Price fixing, bid rigging, and market allocation can be very difficult to detect because the agreements are usually reached in secret, with only the participants having knowledge of the scheme. We often receive tips about possible antitrust activity from business competitors, but there are some telltale signs that others might be able to recognize:
- Large price changes involving more than one seller of similar products but different brands, especially if the price changes happen at about the same time;
- Statements from a seller suggesting that a particular customer or contract “belongs” to a certain vendor;
- Fewer competitors than normal submitting bids on a project;
- The same company repeatedly being the low bidder on contracts for a product or service, or in a particular area;
- Bidders seeming to win bids on a fixed rotation; and
- Unusual and unexplainable large-dollar differences between the winning bids and all other bids.
Keep in mind that these signs are by no means conclusive evidence of antitrust violations, just indicators that they may be. But if you do suspect someone of violating federal antitrust laws, you can report it to DOJ at antitrust.complaints@usdoj.gov or to the FBI through our Tips webpage.
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