Competition Matters

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.