The arena for antitrust enforcement is about to get tougher. Under the Bush administration, deregulation was tantamount to anarchy. Nothing was controlled and we are living with the consequences.
The economic circumstances of today are requiring enormous infrastructure outlays. The flood of construction contracts to be let will be inviting targets for “gentlemen’s agreements”, otherwise known as price fixing. Anyone who has frequented “bid lettings” is aware of the conversations that take place there. There will be rather substantial profitability resulting from the expansion of project volume. That in itself will have an impact upon pricing.
In public works projects, the contracting authority engineers will have placed a construction value on each project, a necessity for the budgeting process. The relationship between the engineer valuations and the bid levels, as well as the similarity or patterns of bidding will in some instances suggest that the bidding system is not as competitive as it was supposed to be.
In the normal course, some disgruntled employees of contractors will report to enforcement authorities that their former companies were submitting collusive bids. Alternatively, someone caught up in some other enforcement difficulty will make a plea deal by giving up a bunch of price fixing conspirators. Finally, whiskey brain causes public statements that are often overheard by the wrong sort. Investigations will more frequently spring from those reports than was the case under the Bush administration.
There will be a more aggressive enforcement posture under the Obama administration. There is always a more aggressive antitrust enforcement atmosphere in a Democrat administration anyway. Now, however, there is a supplemental purpose to the infrastructure projects – the creation of jobs. Every dollar of job creation funding will be deemed precious. People found or believed to be colluding on the price of public works can expect a tougher enforcement environment because of these influences.
That places a premium upon astute professional management of antitrust investigations right from the start. As soon as you get wind of an inquiry into collusive pricing that could include your company, if for no other reason simply because your company was a bidder, you must get control of where you are in terms of possible exposure. Immediate focus has a lot to do with minimizing exposure. Your competitors who are also involved in the investigation will also be sensitive to the urgency of the need to get on top of this. Delay on your part in dealing expertly with it can be expected to increase your company’s likelihood of having a difficult time.
By way of a refresher on this recently neglected subject, denials of involvement by your people will not readily be credible if they were where the meetings took place at the time the meetings took place. No one is likely to believe that your company received advance copies of competitor bids or similar before the fact information without your reciprocation in providing your own similar information.
Prosecutors know that no one gets involved in price fixing inadvertently. Grand juries will be easier to influence because grand jurors are aware of the dire circumstances in which so much public funding is being devoted to public works. None of this will be taken lightly. Wrist slaps should not be expected. Prison terms will be meted out. Civil damages cases will aggressively follow government action. There is too much private attorney incentive in them for it to be otherwise.