Insights

DOJ Forms New Criminal Antitrust “Strike Force” Focused on Investigating Price Fixing and Bid Rigging For Government Contracts

Firm Thought Leadership

On November 5, 2019, the U.S. Department of Justice (“DOJ”) announced the creation of a new “strike force” designed to combat criminal antitrust violations in the government procurement process.  The newly-formed Procurement Collusion Strike Force (“PCSF”) will include prosecutors from DOJ’s Antitrust Division and 13 U.S. Attorneys’ Offices, as well  as investigators from various partner agencies such as the Federal Bureau of Investigation, the Department of Defense Office of Inspector General, and the U.S. Postal Service Office of Inspector General.

At a press conference announcing the formation of the PCSF, Antitrust Division head Makan Delrahim said the strike force will train procurement officials to prevent and identify collusion and other crimes that may occur in the process of awarding government contracts and grants.  It will also look for ways to identify potentially collusive conduct using data analytics programs and government procurement data.

In recent years, DOJ has become increasingly focused on collusion in public procurement.   In 2018, Delrahim announced that DOJ would “investigate aggressively and prosecute without hesitation companies who cheat the United States government and the American taxpayer.” Delrahim also said DOJ would exercise its authority under Section 4A of the Clayton Act to seek treble damages in parallel civil actions when the government is harmed by an antitrust violation.  In the last two years, at least nine individuals have been indicted as a result of investigations into bid rigging related to government procurement activities.  Similarly, companies have paid over $150 million in criminal fines and reached separate civils settlements with the DOJ totaling over $200 million.

This news underscores the need for clients that do business with the federal government to ensure their compliance and training efforts are not only up-to-date, but also effective.  This is truly an area where an ounce of prevention is much better than what could be pounds of cure.  Corporate fines for criminal violations of the antitrust laws routinely top tens of millions of dollars, and are often in the hundreds of millions.   A robust compliance program is critical to ward off the increased focus that will follow this announcement and will help protect the company against actions by rogue employees.  Earlier this year, the Antitrust Division announced for the first time that it would take the existence of a defendant’s compliance program under consideration when prosecuting criminal antitrust violations.  This marks a sea change in the Antitrust Division’s approach and more closely aligns its treatment of antitrust compliance programs with those in other DOJ divisions.  We strongly recommend clients revisit their compliance programs now to take advantage of this change before the coming heavier scrutiny from the PCSF. 

 

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