A Belgian security firm, G4S Secure Solutions NV (G4S), has agreed to plead guilty and pay a $15M criminal fine for its role in a conspiracy to rig bids, allocate customers and fix prices for defense-related security services, including a multimillion-dollar contract issued in 2020 to provide security services to the U.S. Department of Defense for military bases and installations in Belgium.
There’s a new sheriff in town, with the ability to enforce US extraterritorial laws on non-US companies, the Procurement Collusion Strike Force (PCSF). On June 25, 2021, the Department of Justice (DOJ)- Antitrust Division- announced the first criminal antitrust prosecution and international resolution obtained by the PCSF. The plea agreement is subject to court approval.
“The Procurement Collusion Strike Force is committed to safeguarding public procurement at home and abroad from collusion that cheats American taxpayers out of the benefits of competition for critical goods and services. The division, along with our law enforcement colleagues, will hold security services providers and their executives accountable for conduct that targeted contracts to secure Department of Defense bases and installations abroad.”said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division
The Department of Defense (DOF) maintains military bases in Belgium to protect the national security interests of the United States. On behalf of the United States government, the Department of Defense enters into and funds contracts for security services (ie security guards, mobile monitoring, electronic surveillance) with companies to protect the security of these physical locations and the safety of personnel stationed there.
The DOF when seeking security services will normally issue tenders and invite firms to bid on these contracts. These tenders list the location to be guarded, the duration of the services, and the overall scope of services sought. When a company submits a winning bid, it is selected to enter into a contract with the customer for the provision of the services sought.
G4S, two other Belgian companies, and other unnamed co-conspirators, who were competing providers of security services to a variety of customers in Belgium, participated in a conspiracy to suppress and eliminate competition on the provision of security services in Belgium.
Between 2019 and 2020 G4S along with co-conspirators conspired to allocate security services contracts in Belgium among themselves and determine the prices at which contracts would be bid. The contracts affected by the conspiracy include those for the U.S. Department of Defense and the North Atlantic Treaty Organization Communications and Information Agency, which is funded in part by the United States.
The DOJ noted particularly that G4S and its co-conspirators engaged in:
- coordinating price increases;
- submitting artificially-determined, noncompetitive, inflated bids; and
- refraining from bidding for certain contracts.
G4S and its co-conspirators also engaged in or conspired to engage in, among other things:
(a) attending meetings and engaging in discussions during which they agreed to
allocate customers, rig bids, and fix prices;
(b) participating in meetings to discuss which co-conspirator would submit the
winning bid on particular tenders, including those issued by the Department of Defense for
locations in Belgium;
(c) communicating with each other via phone, text message, encrypted messaging
applications, and email to discuss which co-conspirator would submit the winning bid on
particular tenders, including those issued by the Department of Defense for locations in
(d) agreeing, during those meetings and communications, not to compete against
each other for particular tenders, including those issued by the Department of Defense for
locations in Belgium;
(e) submitting or withholding bids in accordance with the agreements reached,
including to and from the Department of Defense for locations in Belgium;
(f) providing security services at collusive and non-competitive prices, including to
the Department of Defense at locations in Belgium; and
(g) receiving payments for security services at collusive, non-competitive prices,
including from the Department of Defense for locations in Belgium.
G4S was charged with violating Section 1 of the Sherman Act, 15 U.S.C. § 1. G4S has agreed to plead guilty to the charges and to pay a $15 million criminal fine. G4S will continue cooperating with the DOJ’s investigation. It is unclear whether the other co-conspirators will be charged, but it would be fair to assume additional prosecutions stemming from this investigation in the next few months, including possible charges against their executives.
Companies participating in US government contracting (whether in the US or internationally) ought to consider putting in place antitrust/competition training and awareness programs, especially for the employees participating in the public tenders and procurement with US governmental entities.
Since the antitrust enforcement risk has been upgraded to a criminal liability for companies and potentially individuals too, it is therefore important to expand your fraud/compliance programs to detect red flags of collusion. Policies will also need to be appropriately tailored to this new risk area, and particular attention will need to be given to tips and concerns reported via internal channels, such as reporting hotlines.
Lastly, similarly to other US reporting programs, a company may benefit from mitigation credit and immunity under the Antitrust Division’s Leniency Program, should it be first to report potential misconduct.
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