Justice Department to probe companies exploiting supply chain issues

Dive Brief:

The U.S. Department of Justice unveiled an initiative Thursday to identify and prosecute companies that exploit supply chain disruptions for profit.
The Justice Department's Antitrust Division, in collaboration with the FBI, is taking steps to investigate collusion and potential violations of antitrust laws "in industries particularly affected by supply disruptions," according to a statement. The division is prioritizing existing investigations.
The DOJ has also formed a working group with countries including the U.K., Canada, Australia and New Zealand that will share intelligence and utilize other tools to detect global collusion schemes.

Dive Insight:

Companies across industries raised prices to offset higher costs of labor, transportation and raw materials. Federal regulators are looking to root out those that "seek to use supply chain disruptions as a cover for collusive schemes," according to the DOJ statement.

State and federal governments have targeted price gouging during the pandemic before, but they've largely targeted health care sectors or industries raising prices on hand sanitizers, personal protective equipment and other products meant to reduce transmission of the coronavirus.

Congress voted to expand the powers of the Federal Trade Commission in 2021 under the COVID-19 Consumer Protection Act, granting the agency more authority to target deceptive acts or practices related to the coronavirus pandemic. Some states, including New York, enacted similar laws — in some cases expanding price gouging rules to cover basic essentials such as infant formula and food staples.

Officials have also worked with private companies to identify fraud. Amazon suspended 3,900 accounts in the U.S. for violating its fair pricing policies, and said it has partnered directly with law enforcement agencies to combat price gougers.

Federal regulators are broadening their scope to focus on fraud in sectors beyond health care as the Biden administration looks to address high inflation and soaring consumer prices. The Consumer Price Index grew 7.5% for the 12 months ending in January, the largest increase since February 1982, according to the Bureau of Labor and Statistics last week.

"The lingering challenge of supply chain disruptions from the COVID-19 pandemic has created an opportunity for criminals to fix prices and overcharge customers," said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division in Thursday's announcement. "The FBI and our law enforcement partners will continue to collaborate and investigate schemes that violate our antitrust laws and stifle our economic recovery."