Disaster Recovery

Criminal Enforcement

Disaster Recovery

This page explains how to identify anticompetitive conduct that occurs after a natural disaster and how to report possible violations to the Antitrust Division.

On this page:

Anticompetitive Conduct After a Natural Disaster

The Role of the Antitrust Division in Disaster Recovery Efforts

Related Prosecution: Conspiracy and Bribery Plea and Convictions Following Hurricane Katrina

Reporting Possible Violations

Special Information Related to Hurricanes Harvey and Irma

Related brochure:

Preventing and Detecting Bid Rigging, Price Fixing, and Market Allocation in Post-Disaster Rebuilding Projects

Anticompetitive Conduct After a Natural Disaster

In the wake of devastation caused by a natural disaster, the Federal Emergency Management Agency (FEMA) works with state and local government agencies to solicit competitive bids for cleanup and rebuilding contracts. Anticompetitive conduct that subverts the competitive bidding process includes:

Bid rigging: Two or more firms agree to bid in such a way that a designated firm submits the winning bid.

Price fixing: Two or more competing sellers agree on what prices to charge, such as by agreeing that they will increase prices a certain amount or that they won't sell below a certain price.

Customer or market allocation: Two or more firms agree to split up customers, such as by geographic area, to reduce or eliminate competition.

These agreements are generally secret, and the participants defraud customers by holding themselves out as competitors despite their agreement not to compete. They harm consumers and taxpayers by causing them to pay more for products and services and by depriving them of other byproducts of true competition.

Related document: Preventing and Detecting Bid Rigging, Price Fixing, and Market Allocation in Post-Disaster Rebuilding Projects

The Role of the Antitrust Division in Disaster Recovery Efforts

The Division’s role in disaster recovery efforts is to assist Federal, state, and local government agencies in preventing and deterring violations of criminal antitrust laws, such as bid rigging and collusion in the competitive bidding process.

Training: Antitrust Division attorneys are available to provide training to law enforcement agents, auditors, and procurement personnel to assist them in identifying and preventing fraud in the competitive bidding process.

Enforcement: If collusive conduct is discovered, the Antitrust Division stands ready to investigate and criminally prosecute the individuals and corporations seeking to unjustly profit from these tragedies.

Related Prosecution: Conspiracy and Bribery Plea and Convictions Following Hurricane Katrina

In 2005, Hurricane Katrina devastated the Gulf coast, from central Florida to Texas. Among other things, the hurricane caused extensive damage to the levee systems in New Orleans. The U.S. Army Corps of Engineers funded a project to reconstruct and enlarge one of these levees and solicited bids for this project in August 2006. An investigation by the Disaster Fraud Task Force, including the Antitrust Division, uncovered a conspiracy and bribery scheme, under which a subcontractor offered to pay two U.S. Army Corps of Engineers contractors in exchange for their attempt to steer a dirt, sand, and gravel subcontract on the levee reconstruction project to the subcontractor. The subcontractor planned to use part of the proceeds from the subcontract to pay bribes of approximately $299,000 to the U.S. Army Corps of Engineers contractors.

As a result of the investigation, one of the U.S. Army Corps of Engineers contractors pleaded guilty to a bribery charge, and the other U.S. Army Corps of Engineers contractor and the subcontractor were convicted at trial on conspiracy and bribery counts. The subcontractor was sentenced to 60 months in prison, and the U.S. Army Corps of Engineers contractor that went to trial was sentenced to 70 months in prison.

If anticompetitive collusion is discovered, the Antitrust Division stands ready to investigate and criminally prosecute the individuals and corporations seeking to unjustly profit from these disasters.

See also: U.S. v. Durwanda Elizabeth Morgan Heinrich and Kern Carver Bernard Wilson

Reporting Possible Violations

If you have information about possible anticompetitive activity related to disaster recovery efforts, please contact us:

Phone: 1-888-647-3258 (toll free in the U.S. and Canada) or 202-307-2040

E-mail: antitrust.complaints@usdoj.gov

Mail: Citizen Complaint Center
Antitrust Division
950 Pennsylvania Ave., NW
Room 3322
Washington, DC 20530

We recommend that you use these questions as a guideline for reporting the activity:

  • What are the names of companies, individuals, or organizations that are involved?
  • Can you give examples of the conduct that you believe violates the antitrust laws? If so, please provide as much detail as possible.
  • What is the product or service affected by this conduct?
  • Who are the major competitors that sell the product or provide the service?
  • What is your role in the situation in question?

Related page: Reporting Antitrust Concerns

Special Information Related to Hurricanes Harvey and Irma

As a member of the National Center for Disaster Fraud Task Force, the Antitrust Division is committed to offering our expertise and assistance in the wake of the devastation caused by Hurricanes Harvey and Irma. If you would like us to give a presentation to your group on antitrust laws and detection of criminal antitrust violations, please contact us:

Frank J. Vondrak, Chief, Chicago Office
E-mail: Frank.Vondrak@usdoj.gov
Phone: 312-353-7530
Fax: 312-353-1046
Mail: Antitrust Division
209 South LaSalle Street, Suite 600
Chicago, IL 60604-1204

Related documents on this site:

The National Center for Disaster Fraud

Antitrust Guidance—Hurricanes Harvey and Irma

Expedited Procedure for Hurricane Business Reviews

Updated September 18, 2017