The construction sector has long drawn attention from federal and state antitrust authorities. For company owners and managers in North Carolina, understanding the nuances of antitrust law is more than just due diligence—it’s a crucial defense against severe legal and financial penalties.

Why Construction Faces Unique Antitrust Scrutiny

The construction industry is uniquely vulnerable to antitrust enforcement for several reasons. The nature of competitive bidding on projects frequently puts contractors in situations where competitors interact. Subcontractor relationships often blur the lines between partners and rivals. Moreover, trade associations—common in the industry—frequently bring competitors into contact, increasing the risk of improper communications.

Adding to that, the high-dollar value of many construction contracts makes them prime targets for regulatory attention.

Core Federal Antitrust Laws Construction Firms Must Understand

Federal antitrust compliance is governed primarily by three laws:

• The Sherman Act outlaws practices that unreasonably restrain trade and criminalizes monopolistic behavior. It’s a powerful enforcement tool and applies broadly across all industries, including construction.
• The Clayton Act zeroes in on specific anti-competitive practices such as price discrimination, tying arrangements, and exclusive dealing that harms competition.
• The Federal Trade Commission Act serves as a catch-all statute that prohibits “unfair methods of competition” and deceptive business practices. It gives regulators wide latitude to address emerging concerns.

These laws may seem abstract, but courts have provided very specific guidance about which behaviors violate them.

The Most Dangerous Practices: “Per Se” Violations

Some actions are considered so obviously harmful to market competition that they’re classified as “per se” violations—meaning they’re automatically illegal, regardless of the outcome. In construction, the most common examples include:

Price Fixing

When competitors agree—explicitly or implicitly—to control prices, it undermines fair competition.

“This doesn’t require an explicit agreement to charge exactly the same price—almost any coordination on pricing elements can violate the law.”

Examples of illegal conduct include standardizing fee schedules, agreeing to honor specific discounts, or avoiding price cuts. Warning signs include uniform pricing among competitors, synchronized price increases not tied to cost hikes, and the sudden elimination of discounts.

Market Division

Dividing up markets among competitors—whether by geography, customer type, or project category—is illegal. Even informal “understandings” to stay out of certain regions or avoid bidding for particular clients can trigger antitrust scrutiny.

“Even bidding behaviors like consistently declining to bid in certain areas or for certain customers… can suggest market division.”

Bid Rigging

Perhaps the most concerning for contractors, bid rigging can take many forms:

• Bid Suppression: Some contractors agree not to bid or to withdraw bids.
• Complementary Bidding: Some submit intentionally high or noncompetitive bids to give the appearance of competition.
• Bid Rotation: Firms alternate being the lowest bidder in a coordinated fashion.

“Each of these practices artificially inflates prices and undermines the competitive bidding process that public and private owners rely on.”

Government watchdogs are especially alert to bid rigging involving public infrastructure or taxpayer-funded projects.

High-Risk Situations That Deserve Extra Caution

Several routine activities present elevated antitrust risks:

Communications with Competitors

Avoid discussing prices, bids, or market strategy with competitors in any form. Emails, texts, and verbal conversations can all be used as evidence in investigations.

“Never fall into the trap of justifying questionable practices because ‘everyone else is doing it.’”

Trade Association Participation

Trade groups offer professional benefits but also pose legal risks. Review agendas before meetings, avoid discussing sensitive competitive topics, and excuse yourself from conversations that veer into improper territory.

“When participating in trade association activities, construction managers should avoid any discussions of prices, terms or conditions of sale, costs, future production, or marketing plans.”

Joint Ventures and Partnerships

Collaborations between potential competitors can be lawful but must be carefully structured. Always consult legal counsel early in the process.

Pricing and Bidding Discussions

Even if pricing data is public, sharing strategy or intentions with competitors can trigger antitrust concerns.

“Even seemingly innocent sharing of pricing strategies or bidding approaches between competitors can create significant legal risk.”

How Construction Firms Can Proactively Stay Compliant

Construction managers and executives should take the following steps to protect their businesses:

1. Adopt a Written Antitrust Compliance Policy: Outline prohibited behaviors and responses to high-risk situations.
2. Train Key Employees Annually: Focus on those involved in bidding, pricing, and competitive decision-making.
3. Implement Standardized Bid Procedures: Ensure each bid stands on an independent, documented business case.
4. Encourage Internal Reporting: Create confidential, non-retaliatory channels for whistleblowers.
5. Document Justifications for Key Decisions: Keep clear records of pricing logic, strategy, and any competitive agreements.
6. Conduct Due Diligence for Trade Associations and Joint Ventures: Work with legal counsel to review the risk profile of all collaborations.

What to Do If Investigators Contact You

Your first response matters. Stay calm and polite but avoid providing any substantive information without first contacting your company’s legal team.

“Limit your responses to basic identification information regarding your employment, and politely explain that any document requests must be directed to company legal counsel.”

Originally reported by Ward and Smith.