South Carolina Price-Fixing Attorney
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How to prove price fixing agreements?
That is the million-dollar question (often more then multiple that by 3x). Price-fixing is difficult to prove because the price-fixing cartels generally know what they are doing is illegal or wrong and, therefore, they make agreements in private meetings, on phone conversations, through undetectable communication apps using end-to-end encryption (whatsapp, telegram, signal, etc.), or through other creative means.
The Department of Justice is often the first to “discover” the price fixing cartel because they have discovery tools that civil litigation attorneys do not. Even still, the DOJ is tipped off to the cartel by something – whether that is a seemingly coordinated change in price, unusual pricing activity that does not correlate with the market, or because of a whistleblower reporting the illegal activity.
How to Prove Price-Fixing in South Carolina
Price fixing is difficult to prove because those participating the conspiracy generally hide their activities. While documents, texts, and recordings that show an illegal agreement likely exist, they probably are not in the hands of the consumer or purchaser – i.e. You.
Whether you are a typical consumer, a buyer for your company, or an executive at your company, there are still questions you can ask yourself about unusual or illogical pricing from your vendors.
Does it appear that your vendors are coordinating pricing? Do you send around RFPs to multiple vendors but only the same few bid? Have you specifically requested a different vendor bid or quote for business and they refused or quoted well above market? Are your vendors charging the same price as each other? If vendors are all increasing pricing, how are they justifying the price increases? Do the vendors often meet at industry events and are price increase correlated to those events? Do your vendors publicly announce their price increases? In the past, did your vendors compete aggressively on pricing but not there appears to be a lack of competition?
Illegal cartels are also creative on what they fix the price on – it may not be the underlying price or particular service offered, but instead something related to your purchase. For example, price fixing cartels can agree to fix the pricing on following items to drive profits:
- Shipping fees
- Various service, handling, processing, or related “fees”
- Capacity / Production
- Restriction of sales
- Restriction of output
- Production Quotas
- Identity or allocation of customers or sales areas
- Restriction of production
- Discount Programs/promotions
- Terms or conditions of sale such as warranties
- Credit terms / financing rates
There are a variety of creative ways a price-fixing cartel can “come to an agreement” to some way or another raise prices on its customers. Keibler Law Group is experienced in identifying these illegal agreements and successfully prosecuting companies that illegal raise prices on their customers. A fair market is a better market.
What are signs of an illegal price-fixing agreement?
Many antitrust and price-fixing cases are based on circumstantial evidence. While there certainly are “hot” emails in every case, rarely do you find an email from Acme’s CEO to Beta’s CEO saying “let’s agree to charge $5/widget” and Beta responding, “Okay.” Below are some examples of circumstantial evidence that help show illegal price-fixing cartels.
- A pattern of unusual price changes: While price-similarities are indicators of a competitive market, some unusual or questionable price changes may be indicative of something more nefarious. If you’re noticing a pattern of illogical or odd increases in pricing from your vendors for the same or very similar products, the vendors may be price-fixing.
- Unexplained decreases in supply or production: In recent years, price-fixing cartels have attempted to circumvent the rules. Instead of agreeing to raise, fix, or stabilize price of a product, they will agree to simultaneously slash the supply or production of that product. This has several effects – decreasing supply typically increases price. Even still, if the price stays the same, that is indicative that the margins or profits have increased because it now takes less time, resources, or input to create less supply yet stabilizing the price. If you see companies decreasing supply or production in sync, there may be a price-fixing scheme behind this.
- Public Statements: One way cartels monitor and “signal” these production cuts and price increases is through public statements. While publicly traded companies are required to disclose certain information to the public and their investors, privately owned companies do not owe that obligation. Indeed, disclosing internal business judgment decisions – like decisions to cut production, increase prices, or otherwise – may not be in the companies best interest competitively. Often times, cartels do this to (1) signal to other members of the cartel they are complying/doing as they agreed and (2) as a system to check on other members of the cartel.
- Your vendors often deal with each other: It is not unusual for your vendors to engage in business with each other. However, when that occurs there is an increased chance of a conspiracy. Buying and selling from competitors can show competitors each other’s pricing, supply, and terms.
- Whistleblowers: Often times, there is a person on the inside who comes forward about the price-fixing. This person is called a whistleblower. A whistleblower may come forward for a variety of reasons and each whistleblower is unique. Perhaps the whistleblower recently learned of the agreement. The whistleblower may not even be 100% or even 70% sure there is an agreement, but they sense something is wrong and report it. Or maybe the whistleblower is paranoid they may get caught and face prison. May cartels are stopped because of a whistleblower.
- Internal Communications: During discovery we learn a lot about defendants’ actions and communications with others within a cartel. These communications will reflect how the cartel operated, how they spoke to each other, types of language or codewords they used to monitor or signal to each other.
Can someone got to jail for price-fixing?
Yes. Price-fixing is a serious white collar federal crime in the United States. The penalty for price fixing, under the Sherman Act, is $100 million for corporations and $1 million for individuals. Those found guilty of price-fixing may also face up to 10 years in prison.
The Federal Trade Commission states that price-fixing is a major concern of government antitrust enforcement. In addition, it can be prosecuted as a criminal federal offense in the United States.