Piling on: where antitrust and conflicts of interest meet

The recent imposition of a record tying $500 million criminal fine in an antitrust case is an important reminder to C&E professionals about the need for strong measures in this risk area.  But while there’s a lot that can be said about antitrust/competition law generally, rarely is mention made of possible connection between that area of risk and the subject of this blog,  COIs.  Yet, historically there have been cases where the two meet, and understanding their points of intersection can in fact be useful for certain aspects of C&E program management.

One  well known – if not necessarily typical – example was in a case that was decided by the Supreme Court  thirty years ago (American Society of Mechanical Engineers  v. Hydrolevel) in which a nonprofit membership association that issued codes for various areas of engineering was sued by a company that sold safety devices for use in water boilers.  The basis for the suit was that an employee of a competitor of the plaintiff – who was working as a volunteer of the non-profit – caused the non-profit  to publish a letter saying that the plaintiff’s device was unsafe.   This conduct – clearly a COI on the part of the association – was held to be an antitrust violation.  Or, another way of looking at it was that the COI was the motivation for the antitrust offense.

More recently (and perhaps more typically in terms of how these two areas can intersect) cases brought against insurance brokers regarding certain un- (or under-) disclosed payments from insurance issuers – a COI – had antitrust elements, too, meaning that the  insurers allegedly agreed among themselves to refrain from competing against each other in order to help protect this COI-laden state of affairs.     And in a related vein, in the famous (at the time) specialty steel cost-plus corruption cases  competitor suppliers took bidding instructions from a “quarterback” so that a long standing kickback scheme would not be disrupted.

This sort of connection between antitrust and COIs doesn’t happen frequently.  But it is predictable enough so that C&E professionals should – in connection with risk assessment and investigations – be alert to the possibility of it occurring in or to their respective organizations.