Competition Matters

When contracts for goods or services are awarded through the competitive bidding process, coordination among bidders can undermine competition and violate the antitrust laws.

Many articles in past editions of Competition Matters have emphasized that firms supplying the same goods or services in the same geographic area should be competing, not working together. 

In the June 10, 1921, edition of the Holt County (Missouri) Sentinel, a case of price fixing was printed in black and white: At the grain threshers association’s annual meeting, participants fixed wheat at 8 cents per bushel and oats at 6 cents per bushel. Evidence like the 100-year-old news article containing this surprising admission is rarely found today as business people are more aware of what behavior is allowed, and not allowed, under antitrust laws.

In September 2020, Cajan Welding & Rentals LTD., a Louisiana-based company that provides equipment rental and maintenance services, pleaded guilty in federal court to participating in a scheme to undermine the U.S. Department of Energy’s procurement process for servicing the Strategic Petroleum Reserve, the nation’s emergency supply of crude oil.

Complementary bidding (also known as “cover,” “courtesy” or “shadow” bidding) occurs when competitors agree to submit a series of higher-priced bids or deliberately defective bids that give the appearance of genuine competition, but in actuality ensure the selection of a designated winner at inflated prices. In exchange for manipulating the bid process, the designated winner may share profits with the losing bidders, hire them as subcontractors or coordinate with them so that they can win other contracts.
 

Recently, a nationally syndicated comic strip (think computer programmer with an iconic tie) poked fun at monopolistic behavior.  While a comic strip is meant to bring a chuckle to the reader, in reality, monopolistic behavior is no laughing matter.

Imagine this scenario:  it is time once again for your organization to award the contract for the coming year’s supply of widgets. This scenario is designed to provide food for thought to help you weigh the ethical pros and cons of reporting suspicious vendor behavior. 

State and federal antitrust enforcers investigate various kinds of anticompetitive conduct that impede free and fair competition, and disadvantage consumers.

When Upton Sinclair wrote The Jungle, he addressed much of the corruption which took place in the meatpacking industry. This then led to federal food safety laws, which were generally effective, but failed to eradicate corruption from the industry. Many say that, thanks to COVID-19, anti-competitive behavior within the meatpacking industry has only been exacerbated. In one particular case, plaintiffs continue struggling to stake a claim against Minnesota cattle ranchers and pork purchasers for violations amidst the economic uncertainty of COVID.

Knowledge is power. Growing up in a family where education was the “family business”, this has been a guiding principle for me. As a former high school social studies teacher, I tried to instill this idea in all my students.