Bid Rigging

Bid rigging is one of the most serious antitrust violations that European competition authorities encounter in public procurement markets. Because public contracts are often large, predictable, and repeated, they create strong incentives for suppliers to collude rather than compete. The result is higher prices, lower quality, and reduced innovation, all at the expense of public budgets.

What is Bid Rigging?

Bid rigging occurs when two or more competing suppliers agree, before submitting tenders, on who will win a contract and at what price. The coordination typically takes one of several forms.

Cover bidding (also called complementary, courtesy, or shadow bidding) is the most common pattern: designated losers submit intentionally high or non-compliant bids to create the appearance of competition while ensuring the pre-selected winner secures the contract.

Bid suppression involves one or more suppliers agreeing not to submit a tender at all, or withdrawing a previously submitted bid, so that the designated winner faces no real competition.

Bid rotation involves suppliers taking turns winning contracts in a market, each staying out or submitting losing bids when it is not their designated turn.

Subcontracting arrangements are sometimes used to facilitate the scheme: the designated loser agrees to submit a high bid on the understanding that it will receive a lucrative subcontract from the winner.

Under EU law, bid rigging is prohibited by Article 101 of the Treaty on the Functioning of the European Union (TFEU) as an anticompetitive agreement. It is also captured by the mandatory exclusion ground in Article 57(4)(d) of Directive 2014/24/EU, which allows contracting authorities to exclude economic operators where there are sufficiently plausible indications of agreements aimed at distorting competition. In the UK, bid rigging is a criminal offence under the Competition Act 1998 and the Enterprise Act 2002, with individuals facing up to five years imprisonment.

Why it matters for bidders

Honest bidders lose contracts they should win when bid rigging operates in a market. Beyond the immediate contract loss, a rigged market suppresses the incentive to invest in innovation, efficiency, and quality because the competitive signal is false. Suppliers operating in sectors where bid rigging has been prosecuted should be aware that competition authorities across Europe, including the European Commission, national competition authorities (NCAs), and the UK Competition and Markets Authority (CMA), actively investigate procurement markets.

A supplier that discovers evidence of collusive tendering involving its competitors should consider reporting to the relevant competition authority. Leniency programmes in most European jurisdictions offer immunity or reduced fines to the first participant to disclose a cartel.

Example

Three civil engineering companies operating in the Netherlands regularly discuss upcoming municipal road contracts at informal dinners. Each month they allocate which company will submit the winning bid, and the others submit cover bids at agreed-upon higher prices. The Dutch Authority for Consumers and Markets (ACM) receives a tip from a former employee and opens an investigation. All three companies receive substantial fines, two directors face prosecution, and all three are debarred from public procurement for three years.

Frequently Asked Questions

How do contracting authorities detect bid rigging?

Authorities and competition agencies use statistical screening tools to identify suspicious bid patterns: identical decimal places in prices, bids clustered just above the winner's price, suppliers who always come second to the same winner, or abrupt changes in bid prices after a new entrant appears. The OECD has published widely-used guidance on bid-rigging indicators for procurement officials.

Can a company be excluded from procurement even without a criminal conviction?

Yes. Article 57(4)(d) of Directive 2014/24/EU allows discretionary exclusion based on sufficiently plausible indications, not a formal conviction. This is a lower threshold. A competition authority investigation, a concurrent civil damages claim, or credible testimony from a whistleblower can each provide grounds for exclusion pending a final determination.

What is self-cleaning and can it reverse a bid-rigging exclusion?

Self-cleaning is the process by which an excluded economic operator demonstrates it has taken concrete remedial steps: compensating victims, cooperating with investigating authorities, dismissing implicated personnel, and implementing compliance systems. Article 57(6) of Directive 2014/24/EU requires contracting authorities to assess self-cleaning submissions rather than applying automatic permanent exclusion. The burden of proof lies with the operator.