by Government Uncovers Conspiracy for Extortion at Car Auctions
Employees of two companies allegedly acted together to artificially inflate vehicle prices. One of these companies was owned by the Eblock platform, which, according to the investigation, did not take measures to stop the scheme.
Conspiracy Charges and Eblock’s Inaction
According to the US Department of Justice, the online dealer auction Eblock acquired a competitor in November 2020. This firm, known as “Company A,” was already involved in fraud and extortion conspiracies. This fact should have been a red flag for Eblock, however, the government claims the company did not take immediate action to stop it.
From November 2020 through February 2022, individuals from Company A conspired with individuals from Company B to suppress and eliminate competition for used cars sold on Company A’s online auction, in violation of the Sherman Act.
It is also alleged that Eblock did not stop the practice of “shill bidding” on Company A’s platform. This led to the artificial inflation of sale prices for used cars.
Conspiracy Mechanism: Data Exchange and Software
The government detailed that employees of Company A and Company B coordinated bidding information among themselves and agreed on the maximum amount each would offer for certain cars. Employees of Company A also provided Company B with special access, which allowed it to see private bidding information of other auction users.
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Moreover, the conspirators jointly developed software that automatically placed shill bids on behalf of real dealerships without their consent. After purchasing the cars, they shared the inventory among themselves and resold it, as well as distributed the profits from this scheme.
Consequences and Whistleblower Reward
Although the government does not disclose the names of all companies involved in the scandal, Eblock agreed to a deferred prosecution agreement and to pay a fine of $3.28 million. The company also committed to implementing a compliance program and cooperating with the investigation.
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The crime turned out to be profitable for one whistleblower, who received a million-dollar reward from the Justice Department’s Antitrust Division. This was the first such reward in the division’s history. FBI representative Mark Remili noted that it was information from this individual that led to the detection and elimination of a criminal anti-competitive conspiracy, which, if left undetected, would have continued to harm American consumers who overpaid for cars.
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This story points to the vulnerability of even digital trading platforms to organized schemes. Artificial price inflation through shill bidding not only undermines trust in the auction mechanism but also directly affects the end buyer, as dealers likely factor their losses into the cost of cars entering the market. The successful application of the whistleblower protection program in this case may set a precedent for combating similar crimes in the future, encouraging company employees to disclose illegal activities.
