The most common ways of bid-rigging in public procurement
Several forms of collusion can coexist in the same public procurement procedure. The same type of practice can also affect purchasing by private entities. Let’s see which are the most common.
Competitors agree winning proposals' rotation schemes, taking turns among themselves to win the procedure.
This strategy is favoured by the repeated participation of the same bidders in public procurement procedures over time.
In this big-rigging scheme, the companies agree on bids with a higher price than that of the company previously chosen to win the procedure.
These cover bids only serve the purpose of creating an illusion of competition in the procedure.
The scheme by which some companies participating in the collusion agree not to submit a proposal to the procedure or withdraw a previously submitted proposal so that the contract is awarded to the company they choose to win the tender.
Companies agree to a bidding scheme with the aim of sharing market between them. Market allocation may focus on costumers, the type of product or service, or the geographic area.
Firms agree to allow a competitor to win the contract, in return for the assurance that they will be subcontracted to supply certain goods or services for that contract.
Market characteristics that can facilitate collusion
The evidence of bid-rigging in public procurement
In a public procurement procedure, several signs should serve as a warning to contracting authorities and other interested parties that they might be facing a bid-rigging scheme.
Most of the time, there are evident signs in the way bids are presented in certain aspects of the commercial conditions offered, suspicious statements by bidders in the tender, patterns in the award of contracts, and in subcontracting of competitors.
In the checklist of signs of bid-rigging in public procurement [text in Portuguese], you can get information about the main warning signs in greater detail.
Reduce the risk of bid-rigging
In the Guide of Best Practices in Combatting Bid-Rigging in Public Procurement [text in Portuguese], prepared by the AdC, it is possible to consult various strategies that contracting authorities can — and should — adopt to reduce the risk of collusion and further promote competition in tenders.
Bid-rigging is a serious infringement of national and European Union Competition Law, punishable by a fine of up to 10% of turnover of firms and, to the respective administrators and directors up to 10% of their annual remuneration.
A firm participating in bid-rigging can - and should - report it to the AdC, using the Leniency Programme, to get immunity from the fine.
Any suspicion of collusion must also be communicated to the Competition Authority by contracting authorities, companies, or citizens, so that the AdC can analyse and open investigations.