International watchdogs to search supply chains for collusion
Anti-competition authorities in the UK, US, Canada, New Zealand and Australia are to jointly investigate the prospect of unfair supplier price hikes, following months of spiralling costs and profits.
The agencies say they will combine their efforts to uncover “those attempting to use supply chain disruptions as a cover for illegal anti-competitive conduct, including collusion”.
The working group will bring together the UK Competition and Markets Authority (CMA), the United States Department of Justice, the Australian Competition and Consumer Commission (ACCC), the Canadian Competition Bureau and the New Zealand Commerce Commission.
The agencies said they are concerned that some “unscrupulous” businesses could “take advantage of [current] disruptions to engage in anti-competitive collusion and practices that cheat other businesses and, ultimately, consumers”.
UK companies proven to have fallen foul of the law could face fines of up to 10% of global turnover, disqualification of directors and criminal prosecution.
CMA executive director of enforcement, Michael Grenfell, said: “People and businesses across the world have been facing higher prices for goods and for transporting them. While price rises can be legitimate, the CMA would be concerned if collusive anti-competitive practices are contributing to these rises or are preventing prices from coming down.
“The CMA is ready to use its legal powers where it finds evidence that the issues in the supply chain might be caused by potential breaches of competition law.”
He added: “These are global issues that are best addressed together. With support and intelligence from partner agencies across the world, we can step in and take enforcement action if we find evidence of anti-competitive behaviour taking place.”
The formation of the new working group comes after manufacturers’ organisation Make UK and the British Chambers of Commerce wrote to the CMA expressing concern about whether extreme rises in shipping costs were justified.
Australian Competition & Consumer Commission (ACCC) chair, Rod Sims, added: “The global freight supply chain is a complex network involving many jurisdictions, so naturally detecting anti-competitive conduct requires strong international partnerships.
“Covid-19 has caused the supply chain disruptions the world is currently experiencing, but the purpose of this working group is to detect any attempts by businesses to use these conditions as a cover to work together and fix prices.
“We will be sharing intelligence to identify any behaviour that restricts or distorts competition, and companies are now on notice that the ACCC and its international counterparts will be ready to act,” Sims said.
Commenting on the decision, Martin Rees, a partner at law firm Squire Patton Boggs, told Supply Management the watchdogs are “keen to ensure there is no undue communication between suppliers of transport services which are leading to price rises”.
He said such concerns around possible collusion arise when there are large disturbances in the market, as have been seen in the logistics sector recently.
Rees said he felt the move was a cautionary measure and that no proof of collusion has been disclosed at this stage. He said: “We’ve always got to find evidence first. Before investigating an infringement, they’ve got to have a proper basis for opening that investigation.”
Shipping costs have skyrocketed since the start of the pandemic, with container prices rising from $1,500 for a 40ft container to up to $20,000.