An agreement among competitors who are ostensibly bidding against each other for a contract to instead coordinate their bids, most commonly by designating in advance which bidder will win and arranging for the other participants to submit deliberately high or noncompetitive bids, so that the contracting party is deprived of the benefit of genuine competition. It is prosecuted in most jurisdictions with competition or antitrust law as a per se violation, meaning that once the coordination is proven it is treated as unlawful without a need to separately prove that it harmed competition or raised prices, and government procurement contracts, including for public construction and infrastructure projects, are a documented and recurring target of bid-rigging schemes.
Facts
Classification CodeIn the United States, bid rigging is a federal felony criminal offense under Section 1 of the Sherman Act 2 Typical PenaltyUnder the Sherman Act in the United States, a felony punishable by a fine not exceeding $1,000,000, or imprisonment not exceeding 10 years, or both, for an individual 3 Elements of OffenseCoordination among competitors bidding on a contract, agreeing in advance which firm will win, undermines the competitive bidding process and can be illegal 4 Notable ExampleIn 2011, the UK Office of Fair Trading fined 103 construction companies for participating in illegal bid rigging schemes 2 Jurisdiction VariationIn Canada, bid rigging is an indictable criminal offence under Section 47 of the Competition Act, a different statutory regime than the felony treatment under the US Sherman Act 2 Classification
Offense GradeSerious or Indictable Offense 1 Sources
1. Bid Rigging (Wikipedia)
Wikipedialead paragraph, first sentenceQuote, lead paragraph, first sentence
Bid rigging is a fraudulent scheme in a procurement action that enables companies to submit non-competitive bids.
2. Bid rigging (Wikipedia)
Legality section
Bid rigging is a federal felony criminal offense under Section 1 of the Sherman Act.
Notable cases, UK construction industry section
The Office of Fair Trading levied fines on 103 construction companies engaged in illegal bid-rigging schemes.
Legal treatment by country section, Canada
an indictable criminal offence under Section 47 of the Competition Act
View the Source3. 15 U.S. Code 1 - Trusts, etc., in restraint of trade illegal; penalty
Section 1 penalty clauseQuote, Section 1 penalty clause
shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $1,000,000, or by imprisonment not exceeding 10 years, or by both
4. Dealings with Competitors: Bid Rigging (Federal Trade Commission)
Bid rigging definition sectionQuote, Bid rigging definition section
Whenever business contracts are awarded by means of soliciting competitive bids, coordination among bidders undermines the bidding process and can be illegal.
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