October 6, 2017

DOJ Official Highlights Intersection Between Its Anti-Corruption and Antitrust Work

Holland & Knight Antitrust and Competition Blog
David C. Kully

On Oct. 3, 2017, the Department of Justice Antitrust Division's Deputy Assistant Attorney General for International Affairs, Roger Alford, delivered a speech at the University of São Paolo discussing the corrosive effect that corruption can have on societies and how the fight against anticompetitive practices often intersects with efforts to combat corruption. Alford observed that corruption and anticompetitive conduct most commonly intersect "in government procurement, when bid rigging can be combined with or facilitated by other illegal activity such as bribery of public officials, unlawful kickbacks, or fraud." In a belt-and-suspenders approach to corrupting a procurement process, a member of a bid-rigging scheme improperly selected to win the next contract might seal the deal by also bribing officials involved in the procurement process.

Alford's comments suggest that thorough compliance efforts take into account not only potential antitrust liability under the Sherman Act, but also possible anti-corruption exposure, including under the Foreign Corrupt Practices Act. As Alford noted, "it is not uncommon for the Antitrust Division to uncover evidence of both bid rigging and other corruption in the course of an investigation." Indeed, in the international arena, antitrust and anti-corruption prosecutions intersected when the Antitrust Division prosecuted a manufacturer of marine hose used to transfer oil between tankers and storage facilities, along with one of its executives, for FCPA violations in connection with their participation in a widespread bid-rigging conspiracy. The DOJ's investigation of FCPA violations based on bribes paid to Nigerian customs officials through a large freight-forwarding company also led to the discovery and prosecution of a price-fixing conspiracy involving freight-forwarding companies.

Alford's message is one that DOJ officials have been delivering for years. In 1999, former Antitrust Division Deputy Assistant Attorney General, Gary Spratling observed that "a compliance audit that detects a payment potentially in violation of the FCPA may simultaneously have detected a payment (as part of a bid-rigging or project-allocation scheme) potentially in violation of the Sherman Act, and vice versa."

Given the severe consequences of a criminal violation of the Sherman Act (heavy fines, jail sentences for executives and treble damage liability in subsequent private antitrust actions) and the opportunity, if a compliance audit detects a Sherman Act violation, to obtain blanket immunity under the Antitrust Division's Leniency Program if the company is the first to provide evidence of a cartel to the DOJ, companies have every reason to listen closely to Alford and Spratling and ensure that neither anticompetitive conduct nor bribery goes undetected.

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