Procurement Collusion Strike Force Announces First International Criminal Antitrust Plea
On June 25, 2021, the Department of Justice’s Antitrust Division (the “Division”) announced the first criminal antitrust prosecution and “international resolution obtained by the Procurement Collusion Strike Force (PCSF).” In announcing its prosecution of, and plea agreement with, Belgian security company G4S Secure Solutions NV (“G4S”) for alleged bid-rigging and price-fixing of contracts to provide security services to military installations in Belgium, PCSF makes good on its promise to combat anticompetitive conduct impacting U.S. interests around the globe. Multiple of our recent alerts, articles, and presentations, including a February 23, 2021 presentation with PCSF Director Daniel Glad, emphasized PCSF’s significant expansion and increasing focus on rooting out collusion in public procurement. As we have reported, one of PCSF’s primary initiatives for 2021 is “PCSF Global” – the Division’s effort to build connections with antitrust enforcers outside of the US and “tackle potential collusion in bids for the staggering amount of U.S. funds spent abroad.”1
The Information against G4S filed on June 25, 2021, charges the Belgian-based company with violating Section 1 of the Sherman Act, 15 U.S.C. § 1 by conspiring with at least two other companies to fix prices, rig bids, and allocate customers in order to suppress competition with respect to contracts to provide security services funded in whole or in part by the United States. The security contracts at issue included those with the U.S. Department of Defense, and with the North Atlantic Treaty Organization Communications and Information Agency (“NCI), to provide a range of services including physical protection of buildings and military locations, mobile monitoring, and electronic surveillance. G4S and its co-conspirators alleged carried out their criminal antitrust conspiracy by:
- coordinating price increases;
- submitting artificially-determined, noncompetitive, inflated bids; and
- refraining from bidding for certain contracts.
Each of these activities are among the “red flags” that PCSF is looking for as it executes its mission to detect and prosecute antitrust crimes in public procurement and on which PCSF has trained thousands of procurement officials and other government personnel involved in contracting at the federal, state, and local levels.2 The Information further alleges that, from at least Spring 2019 until Summer 2020, the co-conspirators organized and implemented their conspiracy through:
- meetings and discussions during which they agreed to allocate customers, rig bids, and fix prices, including meetings to discuss which co-conspirator would submit the winning bid on particular contracts;
- communicating via phone, text message, encrypted messaging applications, and email to discuss which co-conspirator would submit the winning bid on particular contracts;
- agreements not to compete against each other for particular contracts; and
- submitting or withholding bids in accordance with the agreements reached.
G4S has agreed to plead guilty to the charges set forth in the Criminal Information, to pay a $15 million criminal fine, and to continue cooperating with the Division’s ongoing investigation. We anticipate additional prosecutions stemming from this investigation will be announced in the coming months, including possible charges against individual participants as well as corporate defendants.
In addition to Antitrust Division prosecutors, members of the FBI’s International Corruption Unit, the Defense Criminal Investigative Service, and the U.S. Army CID’s Major Procurement Fraud Unit are assisting the investigation, along with PCSF enforcement partners in Europe.
What This Means for You
We encourage all companies that do business with the U.S. government – domestically or abroad – to consider training personnel involved in public procurement regarding the heightened risk of criminal antitrust enforcement in this area. No industry or service is immune from investigation and prosecution. While security services are now very publicly in the DOJ crosshairs, the PCSF is focused on detecting collusion broadly. More than $500 billion is spent annually on procurement, making this area a ripe target for enhanced enforcement and scrutiny. For months, our team has been training companies that do work and provide services of all kinds to government customers regarding red flags and signs for possible collusion.
Now is also the time to take a fresh look at corporate compliance programs and policies to ensure not only that compliance practices are appropriately tailored to the company’s unique risk profile, but also that employees working in areas that may not be obvious targets for antitrust enforcement, such as procurement and government contracting, are aware of the risks. Should you be made aware of concerning conduct or receive information via your internal hotlines, it is critical that you follow up and determine the veracity of the allegations or tips. Oftentimes, these internal investigations are best handled by experienced, outside counsel to maintain impartiality and privilege. And under the Antitrust Division’s unique Leniency Program, companies that are the first to report potential misconduct may be eligible to earn significant mitigation credit, up to immunity for the company and culpable employees.
1 March 24, 2021, Antitrust Division Spring 2021 Update, available at https://www.justice.gov/atr/division-operations/division-update-spring-2021/pcsf-expansion-and-early-success.
2 For more information about the Red Flags of Collusion in Procurement, please contact Lindsey Vaala, Craig Seebald, or Zach Terwilliger for a copy of our red flags flyer.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.