Market Sharing

Market sharing is among the most straightforward forms of anticompetitive conduct and among the hardest to detect in practice. Suppliers in a market sharing arrangement have no need to communicate before each tender: they simply stay out of one another's territory, submit no bids or deliberately non-competitive bids in markets they have agreed to cede, and rely on the absence of real competition to maintain above-competitive prices in their own segment.

What is Market Sharing?

Market sharing in procurement occurs when two or more competing suppliers agree to divide procurement opportunities between themselves rather than compete. The division can be territorial (each supplier covers certain regions or countries), customer-based (each covers certain public authorities or sectors), or contract-based (each covers certain contract types, sizes, or categories).

From a legal standpoint, market sharing is prohibited as a by-object restriction under Article 101 TFEU. Unlike other anticompetitive agreements where the effect on competition must be assessed, market sharing agreements are presumed to restrict competition regardless of their actual market impact. This means that even a small-scale or geographically narrow market sharing arrangement is illegal.

In procurement specifically, market sharing often manifests through patterns of single-bidder or thin-competition tenders. If a contracting authority observes that the same supplier consistently wins in its region with no competition while a different supplier consistently wins in neighbouring regions, that pattern may be indicative of a market sharing arrangement. The OECD and the European Competition Network have both published guidance for procurement officials on recognising these patterns.

Under Directive 2014/24/EU, a contracting authority that has sufficiently plausible indications of market sharing may rely on Article 57(4)(d) to exclude the implicated operators. Member state competition authorities and the European Commission can investigate and fine participants. In the UK, the Competition Act 1998 prohibits equivalent conduct, and the Competition and Markets Authority actively monitors public procurement markets for signs of market sharing.

Why it matters for bidders

For suppliers competing honestly, market sharing by incumbents is a serious barrier to entry. A supplier attempting to break into a new geographic market or sector may find that its bids consistently lose despite being technically strong and price-competitive, because the market has been informally allocated to existing players.

Suppliers who suspect that market sharing is operating in a sector should consider: reporting to the relevant competition authority (and potentially qualifying for leniency), raising concerns through whistleblowing channels if they have inside knowledge, and documenting bid patterns to support a damages claim. A company that has suffered loss as a result of market sharing by competitors can sue for damages in national courts under EU competition law.

Suppliers who are themselves party to a market sharing arrangement face debarment, competition fines, and potential criminal exposure. The leniency programme incentive to report means that cartel stability is always fragile.

Example

Two IT services companies operating across Scandinavia informally agree that one will focus on Norwegian public sector contracts and the other on Swedish ones. For several years each company submits either no bids or deliberately high bids in the other's territory. A Nordic competition authority investigation, triggered by a complaint from a new market entrant, uncovers internal communications describing the arrangement. Both companies receive fines equivalent to a substantial percentage of their annual revenues in those markets and are excluded from procurement for two years.

Frequently Asked Questions

Is market sharing only about geography?

No. Market sharing can be structured around any dimension that divides procurement opportunities: by contracting authority, by contract value band, by product or service category, by time period, or by customer type. The defining feature is that the division removes competitive pressure between suppliers who would otherwise compete.

How do competition authorities prove market sharing?

Investigators use a combination of communication evidence (emails, messages, meeting records), bid pattern analysis, and testimony from cartel participants (often obtained through leniency applications). Statistical analysis of bidding patterns, showing that certain suppliers consistently win in certain segments without losing, is commonly used to identify the affected markets before communications evidence is sought.

What should a supplier do if it suspects a competitor is engaging in market sharing?

Document the observations (bid results, win rates, geographic patterns) and consult competition law counsel. Consider whether to apply for leniency if the company has any involvement, however peripheral. Report concerns to the national competition authority or the European Commission. If you are a public body, refer the matter to the relevant audit or anti-corruption authority.