Analysis: The crackdown on cartels
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Price fixing is nothing new, but the past month has seen a spate of cases arriving before the courts - and the punishments dished out suggests that authorities around the world are taking a tough stance.
Last week in the US, six Japanese freight forwarding
companies pleaded guilty and agreed to pay a cumulative sum of almost
$47m for fixing fees for shipping air cargo from Japan to the States.
That
investigation resulted from a separate investigation into price-fixing
in the aviation industry - a case that led to 21 executives from various
airlines being charged and an enormous $1.8bn in criminal fines being
levied.
Elsewhere in the US last week, a joint venture of
Hitachi and LG Electronics agreed to pay $21.1m in fines for bid-rigging
and price-fixing in the sale of optical disk drives, after pleading
guilty to a federal court in California.
"The bid-rigging and
price-fixing conspiracies involving optical disk drives undermined
competition and innovation in the high tech industry," said acting head
of the Justice Department's anti-trust division, Sharis Pozen.
Masayuki
Takeuchi, Hitachi spokesman, said the joint venture would "work
diligently to improve the company's compliance procedures in order to
prevent other incidents of this nature."
If that wasn't enough,
former executives from Japanese company Panasonic and Brazilian
subsidiaries of Whirlpool and Tecumseh were also indicted on charges of
price-fixing, capping a busy week for the Justice Department.
Panasonic
and Embraco had already agreed to pay a fine totalling $141m for price
fixing between 2004 and 2007, in September 2010. These latest
accusations, however, once again represents the determination of the
U.S. authorities to tackle anti-competitive practices.
"Cracking
down on international price fixing cartels has been and will continue to
be among the most significant priorities for the antitrust division,"
said Sharis Pozen, acting assistant attorney general in charge of the
Justice Department's Antitrust Division.
Earlier this year, this
time in Europe, the offices of several of the continent's major shipping
companies were stormed by EU officials, following up on intelligence
suggesting suspicious activity.
The EU's executive wing said it
had "reason to believe the companies concerned may have violated the
antitrust rules that prohibit cartels and restrictive practices and/or
abuse of a dominant market position."
These high profile cases
have once again shone the spotlight on sharp practices and illustrated
the difficulties that procurement faces, particularly in areas where
transparent pricing is thin on the ground.
The latest spate of
cases suggests that this is an area that is receiving increasing
attention. The size of the fines and the punishments meted out in the
instances mentioned above also indicates that there is a genuine
willingness to tackle the problem head-on.
From a procurement and
supplier perspective, particularly in the current economic climate,
there's a real desire and need for a level playing field.
The
message from the authorities is clear - if we find evidence of price
collusion and supplier cartels then you will face the consequences. The
key, though, is ensuring that that evidence comes to light sooner rather
than later.
These latest cases have acted as a warning shot - when it comes to tackling price-fixing, however, there's no silver bullet.
source procurementleaders.com
Feb 23, 2012 - 02:18
