• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Compliance Mitigation

Compliance Mitigation

Government Investigations / White Collar Crime

  • Start
  • Testimonials
  • Services
    • Investigations
    • Mitigation
    • White Collar
    • Reputation
    • Case Studies
    • Training
  • Contributors
  • Contact
  • Log In
  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

Anti-Trust Law Violations

You are here: Home / Resilience / Anti-Trust Law Violations

January 10, 2021 By Michael Santos

Anti-Trust Law Violations

Video File

Situation

A cement manufacturer and a distributor acquired competitors in a growth strategy. They aspired to increase market share, and eventually became the second-largest company of its kind in the southern United States. These acquisitions increased revenue but also brought more risk and liability. The company’s due diligence failures, and failures to create compliance programs that would mitigate risk set the company up for exposure to legal risks and liabilities.   

All of the information in this case study comes from the Department of Justice press release and other articles referenced below.

State of the Industry

Many regional and national companies pursue a strategy of accelerated growth through mergers and acquisitions. These transactions enable those companies to leverage debt to provide higher rates of return on equity. Significant analysis goes into determining rates of return on capital, future growth projections, potential cost savings through the elimination of duplication of services, and other profit-related aspects of the acquisition. When companies limit their analysis to revenue growth, they often discount the importance of updating a compliance strategy that may mitigate potential liability.

With access to lower costs of capital, companies often pursue riskier deals in search of higher returns. High-debt levels come with risks. To satisfy debt obligations, the companies require more revenues. In an effort to satisfy cash flow requirements, companies sometimes make shortsighted decisions, like cutting compliance budgets.

Background and Analysis

Argos USA LLC, located in Alpharetta, Georgia, produces and sells ready-mix concrete. Argos is a subsidiary of Grupo Argos, a South American company with revenues of $4.1 billion and more than $13 billion in assets. Argos USA operates dozens of concrete plants in the eastern United States, with many in Georgia, the Carolinas, and Florida.

Argos USA accelerated its growth through an aggressive acquisition strategy. Argos acquired Lafarge Holcim for $760 million, and it acquired Lehigh Hanson for $660 million. Along with other acquisitions, Argos increased its capacity to supply cement per millions of tons per year.

As stated above, those deals made Argos the second largest cement manufacturer in the southern United States. Significant logistical challenges came with that growth, and it struggled to integrate a compliance program that would address those challenges.

In the case of Argos, they faced the continuous problem of competition and industry collusion.

With fierce competition, business executives sometimes ignore or overlook antitrust laws that forbid them from colluding to discuss pricing schemes. When one company executive conspires with an executive at another company to set prices for a product, authorities may bring criminal charges for violating the Sherman Anti-Trust law. Such allegations bring enormous risks to the company, and to the individuals involved.

The government began investigating Argos for its role in price-fixing between 2010 and 2016.  

Price fixing occurs when an agreement (written, verbal, or inferred from conduct) among competitors raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. 

According to prosecutors, when consumers make choices about what products and services to buy, they expect that the rule of supply-and-demand sets price, not a secret agreement by competitors. The government believes that when companies enter into agreements to restrict competition, consumers suffer from higher prices. Authorities will investigate allegations of price-fixing and bring charges against organizations and people that violate antitrust laws.

At Argos, the government’s investigation focused on a small number of employees at a local sales office in Pooler, Georgia. The government asserted that these employees colluded with other ready-mix concrete companies to carry out a conspiracy. According to the charges, the executives conspired by raising prices to customers, assigning ready-mix concrete contracts between them, charging fuel surcharges and environmental fees, and offering products to customers at collusive and non-competitive prices. 

On Sept. 2, 2020, a grand jury indicted Argos. The DOJ is also prosecuting two former company employees, Gregory Hall Helton and James Clayton Pedrick, from that Pooler, Georgia office. If found guilty, both Helton and Pedrick could potentially receive sentences of up to a decade behind bars.

Faced with mounting evidence, and the costs and uncertainties of litigation, Argos USA chose to settle with the Antitrust Division of the US Attorney’s office in Georgia. Argos USA entered into a Deferred Prosecution Agreement with the Justice Department. The terms of the agreement required Argos to pay a monetary penalty of $20,024,015. 

In addition to the financial penalty, Argos USA agreed to cooperate in government investigations against its former employees and its former partners that participated in the price-fixing scheme. Further, it had to enhance the corporate compliance program and internal controls.

Argos Deferred Prosecution Agreement

Recommendations

Willful blindness comes at a price. We recommend that corporate stakeholders make a bigger investment in helping law-abiding citizens understand the complexities of white-collar crime. 

People in sales positions frequently pursue higher commission levels, or higher performance toward sales targets, without fully understanding the law. Their decisions on the job can bring massive exposure. 

In the case of Argos, shareholders had to pay more than $20 million in penalties. It likely paid millions more in legal fees. Fortunately, the government did not indict the company on criminal charges, but the Deferred Prosecution Agreement did not immunize the business from the fallout. It had to cooperate against former employees and partners.

Compliance does not fit in a neat and easily definable box on business ledgers. Lack of compliance, however, elevates a company’s exposure to investigations and prosecutions. Companies would be well served by playing solid defense in order to preserve the rewards generated by an aggressive company growth strategy.     

To avoid costly government investigations and legal settlements, we recommend that businesses bring in subject matter experts to analyze risks that are specific to the industry. Those subject matter experts would be positioned to assess potential risks for exposure to investigations that could lead to possible charges for white-collar crime.

Try it free! Compliance Mitigation Learning Management System

Sources

  • https://www.justice.gov/opa/pr/ready-mix-concrete-company-admits-fixing-prices-and-rigging-bids-violation-antitrust-laws
  • https://myargos.argos-us.com/News%20and%20Publications/Press%20Releases/Shared%20Documents/Argos%20Press%20Release%20-%20Argos%20Purchase%20Assets.pdf
  • https://www.grupoargos.com/en-us/about-us/grupo-argos
  • https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing
  • https://www.bizjournals.com/atlanta/news/2021/01/05/feds-charge-argos-usa-price-fixing-savannah.html
  • https://www.justice.gov/atr/case-document/file/1351011/download

Was this post helpful?

Let us know if you liked the post. That’s the only way we can improve.

Filed Under: Resilience

Compliance Mitigation Can Help You:

  • Free: Subscribe to our YouTube channel to access more than 800 videos that will help you understand more about the journey ahead. Learn strategies to succeed.
  • Free: Subscribe to our iTunes podcast to listen and learn while you drive or exercise.
  • Books: Buy books for $25 (shipping included) to learn from strategies that empowered me while I climbed through 26 years in prison, allowing me to succeed upon release (Get free digital book with any paperback purchase).
  • Courses: Enroll in our self-directed, digital courses that will help you build mitigation strategies that lead to best outcomes through judicial proceedings, sentencing, and prepare you for a successful journey through prison ($97 to $297).
  • Consulting: Collaborate with our team of mitigation experts to engineer a pathway that will help you ($400 per hour, fully refundable if you choose it’s not right for you. Learn more about our process).

Sign up to receive more information and tools.

 

Primary Sidebar

Risk Mitigation

Qualify for Non-Prosecution Agreements by showing the story of your company’s journey, and yours..

Mitigate Risk

Compliance Case Studies

1. Non-Prosecution Agreements

2. Executive Summary: Investigations

3. Defrauding Investors: SEC

4. Foreign Corrupt Practices Act

5. Theranos: FDA Rules

6. Dish Networks Fraud (FTC)

7. Kickbacks Schneider Electric

8. FINRA Rules and Compliance

9. HIPPA Violations

10. Case-Study Library

11. Deferred Prosecution Agreements

Free Trial

Free 30-day trial of our courses, including Compliance 101. Avoid government investigations.

Free Sample

Mitigation Case Studies

1. Mitigation Plan

2. Learn About PSR

3. Before Sentencing

4. Attorneys and Narratives

5. Tactics to Succeed

6. Federal Sentencing Guidelines

7. Aberrant Behavior

8. Diminished Capacity

9. Federal Judge’s Advice

10. Early Release

Free Consultation

Our mitigation experts will help you engineer a strategy for success at any stage in your journey.

Book Now

Keynote Speeches

1. Pioneer Industries

2. Silicon Valley

3. California Wellness

4. Tedx Talk

5. Teaching in Prison

6. University of Washington

7. UC Berkeley

8. Executive Summary: Investigations

9. Testimonials

10. Our Story

11. Our Deck

Blog

Our Most Recent Articles

Follow

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube
Compliance Mitigation - Logo
Prison Professors Story

Compliance Mitigation Story

See timeline that led to Compliance Mitigation and learn more about why you will grow stronger with the resources we provide

Learn More

Footer

Social

Follow along on social media.

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

BUSINESS

Corporate Information
Business Model
Corporate Manual
W9 Earning Freedom PDF
W9 Blank PDF
Independent Contractor Agreement

Contact

Compliance Mitigation / Division of Earning Freedom
32565 Golden Lantern, Suite B1026
Dana Point, CA 92629
United States
[email protected]

Earning Freedom Properties

Prison Professors
White Collar Advice
Michael Santos Personal

Navigation

  • Start
  • Testimonials
  • Store
  • Mitigation
  • Contributors
  • Contact

Newsletter

Stay up to date by subscribing to our newsletter.
Trustpilot

Copyright © 2022 · Compliance Mitigation (an Earning Freedom company) · Privacy Policy and Terms of Use