From: JEFF HAIN-MATSON (flmv@flmv.net)
Date: Sun Nov 21 2004 - 07:13:34 PST
food for thought:
USAM Title 7
June 3, 1998
This Title has been reviewed by the Antitrust Division. Questions about
these materials should be directed to Howard M. Blumenthal, Assistant Chief,
Legal Policy Section, at (202) 514-2513, JMD15(BLUMENTH).
Antitrust Resource Manual 1
Attorney General's Policy Statement
"The effectiveness of antitrust enforcement can be substantially enhanced by
utilizing the offices of the U.S. Attorneys to supplement the enforcement
efforts of the Antitrust Division.
"Experience indicates that in those areas where the Antitrust Division has
field offices, the public becomes more antitrust-conscious and consequently
calls to our attention possible violations to a greater degree than in other
areas. Since the Division maintains only seven field offices, it is a fair
assumption that many local price-fixing violations never come to our
attention.
"Furthermore, the Antitrust Division does not have the resources to
investigate and prosecute all local antitrust violations, and at the same
time adequately pursue the other indispensable elements of its enforcement
program.
"In short, I am convinced that the effective and efficient enforcement of the
antitrust laws requires the detection and prosecution of local price-fixing
violations in every geographical section of the country. The efforts of the
Antitrust Division must be supplemented if this goal is to be achieved.
Accordingly, I am assigning to the U.S. Attorneys, effective immediately, the
additional responsibility for enforcing Section 1 of the Sherman Act against
offenses which are essentially of local character, and which involve price
fixing, collusive bidding, or similar conduct. The U.S. Attorneys shall
handle such investigations and proceedings as the Assistant Attorney General
in charge of the Antitrust Division may specifically authorize them to
conduct. To this end, each of you is being provided with this Manual which
sets forth the procedures to be followed in such matters.
B. The alleged illegal practice (the specific practice should be outlined, if
practicable, e.g., price fixing, bid rigging, monopolization, etc., and not
merely described as "restraint of trade");
C. The relevant statute (usually Section 1 of the Sherman Act, 15 U.S.C. Sec.
1);
D. The names and locations of companies and individuals involved to the
extent known;
The most frequent violations of the Sherman Act are price fixing and bid
rigging, both of which are usually prosecuted as criminal violations. Refer
to USAM 7-4.100|0402 for maximum penalties upon conviction.
Conspiracy or Agreement: The conspiracy or agreement to fix prices or to rig
bids is the key element of a Sherman Act criminal case. In effect, the
conspiracy must comprise an agreement, understanding or meeting of the minds
between at least two competitors or potential competitors, for the purpose or
with the effect of unreasonably restraining trade. The agreement itself is
what constitutes the offense; overt acts in furtherance of the conspiracy are
not essential elements of the offense and need not be pleaded or proven in a
Sherman Act case.
Unreasonable Restraint of Trade: Price fixing and bid rigging are among the
group of antitrust offenses that are considered per se unreasonable
restraints of trade.
Identifying Bid-Rigging Activities: Bid rigging generally involves an
agreement or arrangement among companies to determine the successful bidder
in advance of a bid letting at a price set by the successful bidder. The
agreed-upon winning bidder customarily advises the other potential bidders of
a bid amount they must exceed (usually the amount of the winning bid or a
certain amount above that bid). The higher bids submitted by the other
bidders are generally known as complementary bids. (In the case of offers to
buy, the complementary bids will generally be lower than the winning bid.)
Also, some potential bidders may agree to refrain from bidding on a
particular project. In most bid-rigging situations, the conspirators
endeavor to submit three or more bids on the project to create the appearance
that competitive bidding has occurred.
Here is New Hampshire's take on it:
HB 1244-FN, relative to collusive bidding at auctions. OUGHT TO PASS
Rep. Merton S. Dyer for Executive Departments and Administration: This bill
more accurately defines the practice of collusive bidding at auctions and
makes it a class A misdemeanor for a person found guilty of collusive bidding
or a felony if other than a natural person. Vote 18-0.
And from the state fo Maine:
CERTIFICATION REGARDING NONCOLLUSION Under penalty of perjury as provided by
federal law (28 U.S.C. §1746), the Bidder hereby certifies, to the best of
its knowledge and
belief, that:
the Bidder has not, either directly or indirectly, entered into any
agreement,
participated in any collusion, or otherwise taken any action in restraint of
competitive bidding in connection with the Contract.
For a related provisions, see Section 102.7.2 (C) of the Standard
Specifications - "Effects of
Signing and Delivery of Bids" - "Certifications", Section 3 of this Appendix
A entitled "Other
Federal Requirements" including section XI - "Certification Regarding
Debarment, Suspension,
Ineligibility, and Voluntary Exclusion" and section XII. - "Certification
Regarding Use of
Contract Funds for Lobbying."
******************************************************************************
B. Bid Rigging Hotline To report bid rigging activities call: 1-800-424-9071
The U.S. Department of Transportation (DOT) operates the above toll-free
“hotline” Monday
through Friday, 8:00 a.m. to 5:00 p.m., eastern time. Anyone with knowledge
of possible bid
rigging, bidder collusion, or other fraudulent activities should use the
“hotline” to report such
activities.
Steve Grammont wrote:
> Hi Dan,
>
> > thought that you said that you and eleven other people decide which
> >one of your group will bid. That group comes to mind. If each single
> >bid represents 12 people that have informal or formal agreements, that
> >means that instead of 144 people going at it, there are only 12. How is
> >that in the seller's best interest, again? :-)
>
> Ah... but out of that 12 perhaps only one would be interested in the
> given item (or none or more). The issue is that hundreds of non-
> associated likely bidders, out of millions of possible bidders, can come
> in at any time and place a bid. That changes the whole equation and
> eliminates the possible downside of collusion to the seller.
>
> Even if there are tons of informal groups within a speciality, which I
> doubt, remember that it only takes two competitive bidders to drive up
> the bidding. No need for the other 10. The most expensive item I ever
> bought was between me and another guy (whom I know, but don't have an
> agreement with). The start price was $1, the final price was nearly
> $800. We were the ONLY two who bid on the thing in 7 days. I think
> everybody else smelled the blood and kept far, far away from us :-) The
> seller made out handsomely since arguably it was only worth $400.
>
> >You mention a case where it might help and I don't disagree that it
> >could happen. I would consider that, at best, a unique circumstance, as
> >there are a load of assumptions in that scenario.
>
> That was a real life example :-) I have tons of other ones like that
> too. Happens quite frequently.
>
> >Truth is that, as buyers, we are in it for the best circumstance for
> >ourselves (no collusion) or our group (collusion), shortterm or
> >longterm. It ain't charity - I would think that we could agree on that.
>
> Yup. But as a frequent seller I use the simple "what is good for the
> goose is good for the gander" test. As a seller do I mind people doing
> this sort of collusion? Nope, not at all. I've even told friends to not
> bid on items I have for sale because I have another one. The high bidder
> *and* my friend potentially benefit at the same time. I'm the only one
> that potentially suffers.
>
> >Fun topic.
>
> Quite interesting! Ryan's follow up comments are a good read too.
>
> >Oh... I was in Maine for the first time the day before
> >yesterday. Beautiful!
>
> Sure is :-) Thanks for saying so.
>
> Steve
>
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