Collusive Tendering

Collusive tendering is essentially synonymous with bid rigging in European competition law, though the term is more commonly used in procurement and compliance contexts while bid rigging tends to appear in competition enforcement. Both describe the same underlying behaviour: suppliers who should be competing independently instead coordinate to manipulate the outcome of a tender.

What is Collusive Tendering?

Collusive tendering encompasses any form of coordination between tenderers that is concealed from the contracting authority and designed to subvert the competitive process. It covers explicit agreements on winning bids, cover bids, bid suppression, and market allocation, as well as less obvious conduct such as sharing pricing information in advance of submission or coordinating post-tender negotiation strategies.

The prohibition has two legal foundations in European law. Under competition law, Article 101 TFEU prohibits agreements between undertakings that have the object or effect of preventing, restricting, or distorting competition. There is no de minimis threshold for collusive tendering: even arrangements between small suppliers covering a small contract value are caught.

Under procurement law, Directive 2014/24/EU addresses collusion through Article 57(4)(d), which enables contracting authorities to exclude operators where there are sufficiently plausible indications that the operator has entered into agreements with other economic operators aimed at distorting competition. This discretionary ground can be invoked even where no competition authority has made a formal finding: the contracting authority can act on its own assessment of the evidence.

The interaction between these two bodies of law creates cumulative exposure for colluding suppliers. They face competition fines (up to 10% of global turnover under EU rules), debarment from public procurement, civil damages claims from the contracting authority (overcharge recovery), and in several EU member states and the UK, criminal prosecution of individuals.

Why it matters for bidders

Participating in collusive tendering, even if encouraged by others in your sector, carries serious legal and commercial risks. Competition authorities across Europe run active leniency programmes, meaning the first company to self-report receives immunity from fines. This creates strong incentives for cartel members to defect and report. Suppliers who believe they are operating in a market where collusion exists should consult competition law counsel before participating in further tenders.

Suppliers who discover that a tender they have entered has been rigged against them have legal standing to seek remedies. In the EU, the Remedies Directives (89/665/EEC and 92/13/EEC, as amended) require member states to provide effective and rapid review procedures, including the power to set aside decisions and award damages. In the UK, the Procurement Act 2023 strengthens transparency obligations that make collusion easier to detect and challenge.

Example

A group of pharmaceutical distributors competing for a regional hospital supply contract in Italy regularly meet informally to discuss pricing before each tender round. Over several years they rotate the winning bid, each submitting higher prices in years when it is another member's turn. AGCM (the Italian Competition Authority) opens an investigation following a whistleblower report and finds internal emails confirming the arrangement. The companies face substantial fines and are excluded from further procurement for three years.

Frequently Asked Questions

Is information sharing between tenderers always collusive?

No. Legitimate pre-tender market engagement, consortium arrangements disclosed to the buyer, and public industry association activities involving pricing surveys are not automatically collusive. The question is whether the information sharing reduces competitive uncertainty in a way that distorts the tender. Sharing specific future pricing intentions with a competitor who will bid against you is high risk. Consortia submitting a joint bid are not colluding provided they are not individually capable of performing the contract alone.

How should a supplier respond if approached to participate in collusion?

Refuse clearly, document the approach, and seek legal advice. Do not participate even partially or under pressure. Most competition authorities treat entering the arrangement and then failing to follow through as participation, not withdrawal. If the approach amounts to pressure or inducement, it may be reportable under the EU Whistleblower Directive (2019/1937) or to the relevant competition authority.

Can joint ventures or subcontracting relationships create collusion risk?

Yes. If two companies that are individually capable of performing a contract agree to bid jointly rather than competitively, that can amount to market sharing or collusive tendering. The test is whether each party could realistically have bid independently. Contracting authorities and competition authorities scrutinise joint bids and subcontracting arrangements, particularly where the same parties appear together repeatedly across multiple tenders.