The Competition Authority has developed a check list of several situations that indicate a pattern of behavior typically found in bid-rigging cartels. This check list is solely meant to be a support guide to public authorities and other entities promoting public tenders. These entities should also be aware of other suspicious circumstances, like similar prices and other conditions, cost estimates and prior relations between undertakings.
Article 4 of the Competition Act (Law 18/2003, 11.6.2003) prohibits “agreements between undertakings, decisions by associations of undertakings and concerted practices between undertakings, regardless of their form, which have as their object or effect, to prevent, restrict or distort, in a significant way, competition in the whole or part of the national market”.
A cartel, or collusion between undertakings, is a secret agreement between competitors with the aim of rectricting competition in the market.
These agreements can be reached under a number of ways, but mostly they directly or indirectly fix purchase or selling prices, set selling restrictions and production quotas, or rigging other trading conditions.
Overall, cartels are a very serious competition infringement, as it injures consumer welfare by raising prices and restricting supply and by damaging competitiveness and market efficiency.
The OECD (1) has concluded that hard core cartels – agreements between competitors to fix prices, restrict production, share markets and clients and bid-rigging – is one of the most serious competition infringements.
Economic theory and the past experience of the OECD (1)/(2), the European Union, United States of America and Canada allows us to identify a number of situations that can lead to the discovery of a cartel.