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“Five Eyes” competition agencies launch new working group to put supply chain businesses on notice against collusion

  • United Kingdom
  • Competition, EU and Trade
  • Consumer
  • Food and drink
  • Retail

24-02-2022

In the light of COVID-19 pandemic-induced supply chain disruptions leading to much higher freight rates and more expensive goods for consumers, on 17 February 2022, the “Five Eyes” competition agencies (the UK’s Competition and Markets Authority (‘CMA’), the United States Department of Justice (“DoJ”), the Australian Competition and Consumer Commission, the Canadian Competition Bureau and the New Zealand Commerce Commission) launched a new working group putting companies involved in global supply chains on notice not to collude.

The launch of the group follows concerns about higher prices resulting from supply chain disruption across the economy. The group is concerned that businesses could take advantage of the disruptions to engage in anti-competitive collusion and practices that cheat other businesses and ultimately consumers. For example, by entering into price fixing or market sharing arrangements.

The group builds on the long-standing cooperation and intelligence alliance between the Five Eyes competition agencies who are signatories to the Multilateral Mutual Assistance and Cooperation Framework for Competition Authorities (“MMAC”). The MMAC, signed in September 2020, includes a memorandum of understanding focused on reinforcing and improving existing cooperation and coordination on investigations and a model agreement to support the development of individual arrangements among the participants that may include the exchange of case information and assistance in individual competition investigations, to the extent permitted by respective national laws.

The new working group extends this existing cooperation with the Five Eyes agencies to improve effectiveness and efficiency of competition investigations that span multiple jurisdictions and the group will meet regularly to develop and share intelligence to detect and investigate suspected anti-competitive behaviour.

The CMA’s announcement states that “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” and recognises that “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”.

In the US, the Antitrust Division of the DoJ has determined to prioritize any existing investigations where competitors may be exploiting supply chain disruptions for illicit profit and is undertaking measures to proactively investigate collusion in industries particularly affected by supply disruptions and has stated that “[f]or those who seek to exploit supply chain disruptions for their own illicit gain, the Antitrust Division, along with the FBI, will investigate and prosecute criminal violations of the antitrust laws, including agreements between individuals and businesses to fix prices or wages, rig bids or allocate markets”.

Eversheds Sutherland comment on Five Eyes competition authorities

This initiative clearly signals that the Five Eyes competition authorities are deepening their collaboration in order to take coordinated and targeted enforcement action to tackle anti-competitive behaviour across global supply chains.

Businesses should note that any recent instances in which the competition rules have been temporarily suspended in the event of acute supply chain issues arising from the pandemic are exceptional and do not otherwise provide comfort for illegal forms of co-operation.

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In fact, this new working group sends a strong message that tough economic conditions will not be tolerated as a cover for illegal behaviour. This initiative is also a reminder to businesses that post-Brexit the CMA is embracing its expanded role and forging stronger relationships across the world, working with partners both closer to home and further afield. The Five Eyes framework is just one example of this.

The group has also been launched against the backdrop of expectations that there will be an increase in dawn raid activity by competition authorities after the hiatus of the Coronavirus pandemic, indicating that competition authorities are looking not just to coordinate with the sharing of information, but also to increase their enforcement activity on a global scale.

How can Eversheds Sutherland help?

Eversheds Sutherland’s Competition, EU and Trade team is experienced in advising businesses on their international business operations and ensuring that any responses to supply chain issues are in full compliance with competition law.

For more information and guidance on how this may impact your supply chain, please get in touch: