What is bid-rigging?
Bid-rigging occurs when two or more competitors secretly agree not to compete with each other for tenders. As a result, one cartel member is sure to “win”.
Bid-rigging is a serious form of anti-competitive conduct and could lead to severe penalties for the companies and individuals involved.
Types of bid-rigging cartels
Bid-rigging cartels can take a number of forms. These include:
- Bid suppression: one or more competitors agree not to bid, or withdraw a previously submitted bid.
- Cover bidding: certain bidders agree to submit bids with higher prices or less attractive (or unacceptable) terms than the bid of the designated winner.
- Bid rotation: competitors agree to take turns to win in the tendering exercise for a series of contracts.
- Agreeing on minimum bidding prices: competitors agree on a price below which none of them would bid.
To incentivise the “losing” bidder to agree to the bid-rigging arrangements, the “loser” may receive compensation or benefit from a subcontracting arrangement by the “winner”.
What should I do?
Competitors should make their tender decisions independently. For instance, they should not exchange pricing and/or other competitively sensitive information with their competitors.
Fighting Bid-rigging Cartels — three short videos on bid-rigging
"Fighting Bid-rigging" brochure
"Getting the most from your tender" brochure