At high cell density, swimming bacteria exhibit collective motility patterns, self-organized through physical interactions of a however still debated nature. Although high-density behaviours are frequent in natural situations, it remained unknown how collective motion affects chemotaxis, the main physiological function of motility, which enables bacteria to follow environmental gradients in their habitats. Here, we systematically investigate this question in the model organism Escherichia coli, varying cell density, cell length, and suspension confinement. The characteristics of the collective motion indicate that hydrodynamic interactions between swimmers made the primary contribution to its emergence. We observe that the chemotactic drift is moderately enhanced at intermediate cell densities, peaks, and is then strongly suppressed at higher densities. Numerical simulations reveal that this suppression occurs because the collective motion disturbs the choreography necessary for chemotactic sensing. We suggest that this physical hindrance imposes a fundamental constraint on high-density behaviours of motile bacteria, including swarming and the formation of multicellular aggregates and biofilms.