Global competition authorities form ‘Five Eyes’ group to tackle supply chain collusion
It is a global crackdown. Competition regulators in Australia, the US, Canada, New Zealand and the UK are joining forces as “Five Eyes” (much like The Avengers) to tackle anti-competitive behavior in global supply chains.
The COVID-19 pandemic has caused a sustained increase in freight and cargo demand, as well as severe supply chain disruptions. Freight prices have increased sevenfold compared to two years ago. We talk about Goldilocks conditions for collusion and cartels in international trade.
What type of ride will they be specifically looking for? (Ask a friend)
With such high demand, the temptation for competitors to fix prices, agree floor prices or divide regions or customers would be strong, particularly in the logistics and transport sectors.
In Australia, we call it cartel conduct. It is the most serious of our competition laws, with the potential for criminal convictions and imprisonment for individuals. The Five Eyes are looking for this, or other supply chain collusion that will negatively impact competition.
But the pandemic has caused real problems – is there a way to work with competitors?
Driving in the crosshairs of the Five Eyes has an immediate and negative impact on consumers (and the competition in general). Pricing in this context means we pay more, and for no good reason. This is clearly a bad thing.
That said, there are plenty of situations where the pandemic has spurred positive collaborations between competitors. Like arrangements to ensure we could maintain access to groceries. For this, you can obtain authorization (a kind of immunity) from the ACCC. You just need to show that the public benefits of what you’re offering (toilet paper for everyone) outweigh the cons (we’ll divide territories, but only while people hoard toilet paper).
After that ?
If the formation of Five Eyes is causing you curiosity, doubt, or chronic sweating, there are a few steps to follow.
- First, think about who your competitors are – vertical and horizontal relationships are often blurred these days, and your customer may also be your competitor.
- Next, consider if and how you work with competitors. Any relationship with a competitor should be subject to careful legal scrutiny from the outset.
- Finally, if the proverbial horse has gotten away, take advice on your exposure and how to extricate yourself from collusion, and consider the availability of whistleblower protections and the company’s cartel immunity policy. ‘ACCC.