Illegal pricing conspiracies have occurred in a wide range of industries, affecting the cost of products ranging from everyday grocery items and auto parts to life-saving medications and electronic components. 

In industries such as financial services and pharmaceuticals, just about every major corporation  has been a defendant, often more than once. 

Banks, credit card companies and investment firms dominate the top tier, accounting for nine of the ten most penalized corporations by total dollars.

That’s according to a new report – Conspiring Against Competition – published last week by the Corporate Research Project of Good Jobs First, a non-profit research center focused on corporate accountability. 

The report draws on data collected from government agency announcements and court records for inclusion in the Violation Tracker database.

“Large corporations which are supposed to be competing with one another are often secretly conspiring to set prices,” said Philip Mattera, research director of Good Jobs First and author of the report. “In doing so, they cause economic harm to consumers and contribute to inflation.”

Of the more than 2,000 cases in which companies made payments to resolve civil and criminal price-fixing allegations, 357 were brought by the Antitrust Division of the Justice Department and other federal regulators ($26 billion in penalties), 269 cases were brought by state attorneys general ($15 billion), and 1,407 class action lawsuits were initiated by private plaintiffs ($55 billion).

Of the $96 billion in penalties, over one-third ($33 billion) was paid by banks and investment firms, mainly to resolve claims that they schemed to rig interest-rate benchmarks such as LIBOR. 

The second most penalized industry, at $11 billion, is pharmaceuticals, due largely to owners of brand-name drugs accused of illegally conspiring to block the introduction of lower-cost generic alternatives.

Price-fixing happens most frequently in business-to-business transactions, though the higher costs are often passed on to consumers. Apart from finance and pharmaceuticals, the industries high on the penalty list include electronic components ($8.6 billion in penalties), automotive parts ($5.3 billion), power generation ($5 billion), chemicals ($3.9 billion), healthcare services ($3.5 billion) and freight services ($3.4 billion).

Information technology’s total is relatively low, at $1.7 billion, apparently reflecting that industry’s heavy reliance on advertising rather than revenue from users.

Nineteen companies (or their subsidiaries) paid $1 billion or more each in price-fixing penalties. 

At the top of this list are Visa Inc. ($6.2 billion), Deutsche Bank ($3.8 billion), Barclays ($3.2 billion), MasterCard ($3.2 billion) and Citigroup ($2.7 billion).

The most heavily penalized non-financial company is Teva Pharmaceutical Industries, which, with its subsidiaries, has shelled out $2.6 billion in multiple generic-delay cases.

Many of the defendants in price-fixing cases are subsidiaries of foreign-based corporations. 

They account for 57% of the cases we documented and 49% of the penalty dollars. 

The country with the largest share of those penalties is the United Kingdom, largely because of big banks such as Barclays (in the interest-rate benchmark cases) and pharmaceutical companies such as GlaxoSmithKline (in generic-delay cases).

Along with alleged conspiracies to raise the prices of goods and services, the report reviews litigation involving schemes to depress wages or salaries. 

These include cases in which employers such as poultry processors were accused of colluding to fix wage rates as well as ones in which companies entered into agreements not to hire people who were working for each other. 

These no-poach agreements inhibit worker mobility and tend to depress pay levels – similar to the effect of non-compete agreements employers often compel workers to sign.

Despite the billions of dollars corporations have paid in fines and settlements, price-fixing scandals continue to emerge on a regular basis, and numerous large corporations have been named in repeated cases.

“Higher penalties could help reduce recidivism,” Mattera said. “But putting a real dent in price-fixing will probably require aggressive steps to deal with the underlying structural reality that makes it more likely to occur – excessive market concentration.”

“The mission of the Corporate Research Project is to help people concerned about corporate accountability do research on companies and industries. Increasingly in recent years, the focus has been on creating tools that help people do the research themselves,” Mattera told Corporate Crime Reporter in an interview last month. “The primary tool is Violation Tracker.”

“There we pull together regulatory enforcement actions by a wide range of federal, state and local agencies along with class action lawsuits. We pull it altogether in the Violation Tracker database so that people can research the track record of large companies.”

Is it just large corporations?

“We include cases involving companies of all sizes, but we aggregate results only for a universe of about 3,000 large parent companies. The parents can be based anywhere in the world.”

How does Violation Tracker differ from the other publically available corporate crime databases?

“One big difference is the scope. It has civil as well as criminal cases. It includes state and selected local cases as well as federal cases. We now have over 550,000 records going back to the beginning of 2000. In addition, we have been adding different categories of class action and multiple district litigation.” 

“This report we just put out on price fixing is based on the addition of 1,400 price fixing cases that we documented going back to 2000. We looked at those together with the federal and state price fixing cases that we had previously collected from the Justice Department and the state Attorneys General.”

“There are 2,000 cases in this report. That’s every significant case that we could find going back to 2000 in which the company was fined or paid a settlement for traditional price fixing or related cases like pay for delay cases, or wage fixing and no poaching cases that have sprung up, where employers are in effect fixing wage rates.”

Out of the 2,000 cases, how many were already in the Violation Tracker database?

“The 600 federal and state cases we had already collected. What’s new to the database are the 1,400 class action and multidistrict cases.” 

How did you get those?

“It was a lot of work. There is no centralized source for this. There is the Pacer database of federal lawsuits. But that includes every lawsuit that was ever filed, including many that were dismissed or that were unsuccessful. We needed to identify those in which the plaintiffs succeeded in getting the company to pay a fine or a settlement.” 

“We made use of this publication Law360, which tracks litigation and reporting on significant cases. I went back through their archives since the publication began in the early 2000s looking for all references to price-fixing cases.” 

“We also looked at all cases that the Judicial Panel on Multidistrict Litigation oversees. We looked for the settlements in that database – and it’s usually a settlement because rarely do these cases go to trial. There are very few verdicts in the private litigation.”

“This report is the latest of a series of reports where we dig into these databases. We’ve done a report on wage theft cases, employment discrimination, product liability, environmental, privacy. Each time, I’ve looked around for a ready made list of cases and settlements, and I’ve never been able to find one. I had to piece it together from a variety of sources.”

What are the other main databases that you look to?

“There is the Corporate Prosecution Registry. But that’s limited to criminal cases. But criminal cases make up only a small portion of the corporate misconduct world. We try to cover all the criminal cases as well. Out of 550,000, under 10,000 of our entries are criminal as opposed to civil. We do tag all of our cases as civil, criminal or combined civil and criminal. We also tag the criminal cases as non-prosecution, deferred prosecution or declinations.”

“The vast majority of OSHA and environmental cases are civil cases. SEC cases are all civil. The number of civil cases ends up being vastly larger than the number of criminal cases.”

Of the 540,000 civil cases, what part of them are brought by the government?

“The vast majority of them are government cases. And when we bring in non-government civil cases, we only deal with class action or multi-district cases. We don’t deal with individual cases. If an individual sues a company, we wouldn’t include it.”

There is a move by public interest groups to get the government to create a corporate crime database. If the government were to create such a database, how would you see it happening?

“It would happen in a way that was similar to what happened with the USASpending database. At one point, it was very difficult to get information on federal contracts and grants. And then OMB Watch created a database called FedSpending. OMB Watch, which doesn’t exist anymore, created this database. They got the data and created a website so people could search for information on specific contracts and grants to companies. It was a great resource.”

“During the Obama administration, there was a move to take that database and create a government version. As I understand it, they licensed the software from OMB Watch and created its own database. It now exists and it’s called USASpending. It’s a great free government resource. It tracks federal contracts. It tracks grants from federal agencies and loans, loan guarantees. It doesn’t include payments to individuals. It doesn’t include tax breaks.”

“It’s a great resource. It’s run by the government. And it’s kept up to date.”

“Ideally, what I’m doing with Violation Tracker should be a government function. There should be a public database. I don’t know whether the federal government would want to go through the trouble of collecting all of the data from the states the way we do.”

One way to do it would be for public companies to report to the SEC all legal settlements, even of private lawsuits. That would be a simple way to do it.

“There is a section in the 10-K called legal proceedings. But they are only required to report material cases. Some companies do a better job than others in reporting their fines and settlements. Larger companies don’t report many settlements. They could argue that even a $1 million fine is not material.” 

“You would have to have much stricter SEC requirements. And they would have to disclose not just material ones – but all legal settlements.”

[For the complete q/a format Interview with Philip Mattera, see 37 Corporate Crime Reporter 17(13), April 24, 2023, print edition only.]