Home Depot may be victim of bid-rigging
Atlanta, August 6--Home Depot, the world's biggest home improvement chain, may have been the victim of an improper bidding process now under investigation by the U.S. Department of Justice, a regulatory filing said.
Disclosure of the investigation came from Abrams Industries, an Atlanta-based builder of shopping centers that gets most of its revenue from constructing Home Depot stores. In a filing with the Securities and Exchange Commission, Abrams said it alerted the Justice Department in June to possible bid-rigging involving one of its subsidiaries, Abrams Construction, and rivals.
Abrams Industries said it had conducted an internal investigation that found evidence "suggesting that behavior in violation of federal antitrust laws may have taken place" in a job-bidding process for Home Depot. In bid-rigging schemes, a customer may overpay because bidders conspire to limit contract proposals.
Abrams Industries first revealed the Justice Department investigation in a July 7 filing and identified Home Depot as the target of the possible bid-rigging in the construction company's annual report submitted to the SEC last week. Abrams Industries said it has received conditional immunity as it cooperates with the Justice Department in the inquiry.
Home Depot spokesman John Simley declined to comment on the disclosure. He said Atlanta-based Home Depot plans to spend $2.8 billion this year on construction of about 200 new stores.
Justice Department spokesman Charles Miller also declined to comment.
Abrams Industries co-Chairman Alan Abrams refused to provide details about the possible improprieties beyond what was contained in the company's regulatory filings.
"From our situation, we felt what we saw made us uncomfortable," Abrams said in an interview.
As a general contractor, Abrams Industries bids to build stores for Home Depot and then divvies out much of the work to subcontractors that specialize in areas ranging from landscaping to plumbing.
In disclosing the investigation on July 7, Abrams Industries also announced the resignation of B. Michael Merritt, who had been with the company for more than 20 years, most recently as chief executive of its construction subsidiary. Merritt couldn't be located immediately for comment.