What Evidence Do I Need In a Price Fixing Lawsuit?

Under federal and state laws, companies have a responsibility to use fair commercial practices. A business that engages in price fixing, fraud, or unfair competition may be legally liable for the damages caused to consumers and competing firms.

There are various ways authorities become aware of such business practices, but the most common is when employees or customers suspect something firsthand. If you suspect price fixing and want to know how to report it, contact a local antitrust litigation attorney.

Identifying Price Fixing and Collusion

Whether you’re a regular consumer of a product or someone who relies on a purchase for their business, price-fixing concerns often stem from the same red flag: a coordinated change in price.

“There was a case involving the price fixing of vitamins in 1999, and it really began because a company in Louisiana was suspicious that its suppliers weren’t competing against each other. They called their senator, who then alerted law enforcement. That spawned a global investigation and criminal prosecutions, and companies had to pay hundreds of millions of dollars to their victims. So people should speak up.”

There are many natural ways for prices to change through market forces. It’s not unheard of for competitors to manipulate the market by artificially inflating prices and fostering unfair competition. This is why state and federal antitrust laws exist.

But how do you prove that price-fixing occurred?

“The evidence of an actual price-fixing agreement is almost always in the hands of the defendants. We certainly wouldn’t anticipate that that would come from the client, or the prospective client,” says Joshua D. Snyder, an antitrust attorney at Boni, Zack & Snyder in Bala Cynwyd, Pennsylvania.

“But the prospective client certainly has a boots-on-the-ground understanding of the market, which can be very valuable and helpful. But in general, we work with an economist and econometrician to really dig into the hard economic evidence and the data to understand what’s happening with pricing and the market structure.”

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Price Similarities Are Normal

Criminal antitrust cases are notoriously complicated. Enforcement actions can involve many players at the state and federal government levels, including the Federal Trade Commission and the U.S. Department of Justice (DOJ).

One of the challenges is that it is hard to prove price-fixing and other anticompetitive conduct. Companies and organizations engaged in illegal practices often try to conceal misconduct. Higher prices or price similarity is not, by themselves, enough to establish an inference of price-fixing. Price similarities are a normal part of a healthy and competitive market and may relate to seasonal changes, new taxation, or tariffs.

When a legal team investigates, they’re asking a lot of questions, Snyder says. “Are there signs of coordinated pricing activity? Is Manufacturer X charging the same as Manufacturer Y? How are they justifying those price changes? Did the price changes or price increases occur around some known meeting where we know the competitors had a chance to talk to one another? Has there been a history of competition and undercutting one another that someone suspects has changed with pricing that is the same across the board, and an apparent lack of competition?”

How To Prove Price-Fixing

State and federal courts will take a holistic view of price-fixing cases. In general, a successful price-fixing claim is built on a foundation of circumstantial evidence. With some exceptions, there is often not a “smoking gun” of direct evidence in a price-fixing case. Here are some of the types of things that can prove illegal price-fixing:

1. An Unusual Pattern of Price Changes: Price similarities are a normal part of a well-functioning market. However, that does not mean that all pricing activity that looks “similar” is legitimate. Often, price-fixing cases start when someone notices an unusual pattern of similar price changes between competing businesses.
2. Public Statements: Businesses fix prices to conceal their unlawful conduct. However, corporate officers and corporate directors still sometimes make public statements that provide evidence that indicates that price manipulation is occurring behind the scenes.
3. Whistleblower Disclosures: A high-ranking employee with inside knowledge about corporate practices may provide information about price-fixing to the media or to antitrust enforcement agencies, such as the DOJ and FTC. These disclosures can help support an independent legal claim.
4. Internal Communications: Internal communications between companies is often evidence in a price-fixing case. Unless there is a “leak” to the press, an antitrust attorney can access these communications during the discovery process.

Documenting Suspected Violations

Evidence is key in any case, and antitrust litigation is no different. However, asking an employee to compile that on their behalf can be problematic.

On the other hand, consumers and competing businesses that have been adversely affected by price fixing, anticompetitive conduct, or unfair competition should write down exactly what happens and preserve all relevant evidence and sensitive information.

How Long Does an Antitrust Case Take?

A lot of price-fixing cases turn into class action litigation, Snyder says, and that litigation typically takes years. “Even the investigation can take months, because you really have to dig into the particular market and understand what’s happening before filing a suit. It really has to be very thoroughly vetted and researched.”

The Cost/Reward of an Attorney

You can file a lawsuit to obtain an injunction to stop unfair practices and recover financial compensation. The money in these cases depends on the legal entity involved and the type of case, but they are commonly done on a contingency fee basis. Under that arrangement, attorneys only collect money if the case wins or settles — usually one-third of the total award, plus expenses.

On a contingency fee basis, you do not pay a lawyer anything, nor do you foot the bill for the extensive discovery costs. “The lawyers advance the costs for the economists and the other experts, and electronic discovery costs can also be very significant, looking into the millions, sometimes tens of millions of dollars, over the life of the case,” Snyder says.

This money comes out of the common fund, should you prevail. As for the attorney’s fees, those are set by the court if there is a class-wide judgment. “So, we work often for years, and then we’re in the hands of the court to decide what our fee will be,” Snyder says. “If we recover what’s called a common fund, essentially a pot of money that goes out to the class, then we get a fee that’s based on a percentage, maybe 25 percent or one-third of that common fund.”

Find an Attorney for Legal Advice

“Every case is different. There’s certainly a lot of nuances, but often the prospective clients have a feel for what’s right and what’s legitimate,” Snyder says. “Clients should, in my view, trust their instincts and look into pricing practices that don’t feel right based on their experiences.”

Allegations of price-fixing schemes and bid rigging need investigation. If you have questions about antitrust violations, contact an experienced antitrust attorney for help.