Too Local to Prosecute?: Justice Department Obtains Indictment Against Ready-Mix Concrete Company and Individuals for Price-Fixing, Bid-Rigging, and Market Allocation

Of the many mistakes that companies can make when considering to enter into price-fixing or bid-rigging arrangements with competitors, one of the simplest may be the belief that their conspiracy is “too local”  or “too small” to attract the attention of antitrust enforcers.

Many of the price-fixing, bid-rigging, and market allocation cases that the U.S. Department of Justice and Federal Trade Commission bring are nationwide and even international in scope.  The prominence of such cases, however, may lead some companies to think that collusion confined to a single state or city will fly under the radar of federal enforcers.

Last week, the Justice Department announced the return of a federal indictment in the Southern District of Georgia that shows that the Department will not shy away from prosecuting locally-organized collusive conduct.  The indictment names one ready-mix concrete company and four individuals for their roles in a long-running conspiracy to fix prices, rig bids, and allocate markets for ready-mix concrete in the greater Savannah, Georgia area.

According to the indictment, from as early as 2010 until approximately July 2016, the charged individuals, on behalf of their three competing companies, participated in a conspiracy to fix prices, rig bids, and allocate markets for sales of ready-mix concrete.  The conspirators reportedly submitted rigged bids and accepted payments for ready-mix concrete sold through contracts and on projects that were affected by the alleged conspiracy.  In order to carry out the conspiracy, the conspirators used one of the individual defendants “as a conduit to exchange price-increase letters and other competitive information between the defendants and other co-conspirators for the purpose of coordinating price increases, rigging bids, and allocating jobs.”

One of the elements that the government must prove for a criminal violation under section 1 of the Sherman Act is that the charged conspiracy was in unreasonable restraint of interstate or foreign commerce.  In this case, although the defendants reportedly worked in the Savannah area, the indictment alleges, among other things, that (1) defendant companies engaged in the manufacture and sale of ready-mix concrete in the Southern District of Georgia “and elsewhere,” that (2) the defendants and co-conspirators (a) bid from Georgia on projects to be performed outside of Georgia and (b) sold ready-mix concrete from Georgia to locations outside of Georgia, and (3) the defendants’ and co-conspirators’ business activities in connection with ready-mix concrete “were within the flow of, and substantially affected, interstate and foreign trade and commerce.”  Such allegations, if proved, would satisfy the “restraint of interstate commerce” element.

For that reason, antitrust practitioners and compliance attorneys should integrate this case into their antitrust guidance to clients, to emphasize that there is no “too local to prosecute” defense to per se violations such as bid-rigging, market allocation, and price-fixing if those violations affect interstate or foreign commerce.

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