Australia joins ‘Five Eyes’ effort to curb supply chain collusion

Australia joins ‘Five Eyes’ effort to curb supply chain collusion

The group of countries is hoping to identify potential cartel conduct in global supply chains and work to prevent it.

Rod Sims (ACCC)

Rod Sims (ACCC)

Credit: ACCC

Australia's competition watchdog has joined its counterparts and other enforcement bodies in the other ‘Five Eyes’ countries, New Zealand, the US, the UK and Canada, to clamp down on supply chain collusion in the wake of COVID-19.

Specifically, the Australian Competition and Consumer Commission (ACCC) is working with New Zealand's Commerce Commission, the US Department of Justice, the Canadian Competition Bureau and the UK Competition and Markets Authority to prevent anti-competitive conduct from occurring in the supply and distribution of goods, including technology products.  

The countries involved in the coordinated crackdown are members of the so-called ‘Five Eyes’ intelligence sharing alliance, with the group of nations hoping to identify potential cartel conduct in global supply chains and work to prevent it. 

According to the ACCC, increased demand for containerised cargo and heavy congestion across the global supply chain have caused disruptions and delays to most parts of the economy, from agriculture to health care, in addition to technology.

Indeed, freight rates on key global trade routes are currently about seven times higher than they were two years ago, it was claimed.  

ACCC chair Rod Sims noted that the global freight supply chain was a complex network involving many jurisdictions and, naturally, detecting anti-competitive conduct required strong international partnerships.

“COVID-19 has caused the supply chain disruptions the world is currently experiencing, but the purpose of this working group is to detect any attempts by businesses to use these conditions as a cover to work together and fix prices,” Sims said.  

“We will be sharing intelligence to identify any behaviour that restricts or distorts competition, and companies are now on notice that the ACCC and its international counterparts will be ready to act,” he added.

Anna Rawlings, chair of New Zealand's Commerce Commission, noted that COVID-related supply chain issues had created significant challenges for economies worldwide and in New Zealand, where many businesses had responded by cooperating responsibly to ensure New Zealanders continued to be supplied with essential goods and services.

However, she stressed that the Commerce Commission still maintained a zero-tolerance stance for "unscrupulous" businesses using COVID-19 as an opportunity for cartel conduct, such as non-essential collusion between competitors or anti-competitive behaviour.

"The international working group will strengthen our continued efforts to deter and penalise cartel conduct,” Rawlings said.

For assistant director Luis Quesada of the FBI’s Criminal Investigative Division, the lingering challenge of supply chain disruptions from the COVID-19 pandemic has created an opportunity for criminals to fix prices and overcharge customers.

“The FBI and our law enforcement partners will continue to collaborate and investigate schemes that violate our antitrust laws and stifle our economic recovery," he added. 

Disruptions to the global technology supply chain, particularly in the hardware market, began to emerge not long after COVID-19 started sweeping across the globe.

As reported in 2020, with countries around the world closing their borders and imposing self-isolation measures amid the pandemic, many supply chains immediately slowed to a crawl.

The impact of the disruptions have also been been felt throughout second and third tier suppliers, which are responsible for some vital elements in the process, such as subassembly, subcomponents, raw materials and even packaging, which can all prevent products from continuing through the supply chain.

Earlier this year, it was revealed that a slump in PC sales over the second half of 2021 was attributed to shipping problems and semiconductor shortages, the same problems affecting other markets, according to analyst firm Gartner.

Indeed, it was claimed at the time that lead times for some PCs are extending to as long as four months.

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