Competition world: a global survey of recent competition and antitrust law developments with practical relevance

“Bid-rigging” – also known as collusive tendering – is regarded as among the most serious infringements of competition and antitrust law by competition authorities and courts worldwide. In the past few months alone, action has been taken against bid-rigging in Australia, Canada, the Czech Republic, Italy, South Africa and the United Kingdom. Indeed, the only successful criminal prosecution ever to have been made under Britain’s criminal cartel offence related to bid-rigging1. The bid-rigging in that case related to the supply of “marine hoses”, which are used in the oil sector for transporting oil between tankers at sea and storage facilities. What is bid-rigging? And what is so bad about it? The answer to these questions reveals something fundamental about the essence of competition law, and its primary concerns. Bid-rigging arises where a customer, procuring goods or services, proposes to award the contract for those goods or services on a basis of a competitive tender. The competitive tender might be necessitated by laws requiring competitive tendering (e.g. the European Union’s legislation on public 1 UK Office of Fair Trading press release 72/08, “Three imprisoned in first OFT criminal prosecution for bid rigging”, June 11, 2008. procurement), or simply motivated by the desire of the customer to obtain the best value for money. Contracts typically put out for competitive tender include building works, especially on significant civil engineering projects, outsourced IT services, catering, cleaning, and so on. Customers are typically large organisations – and are often central or local governmental bodies, for whom the competitive tender is run to ensure that tax payers enjoy the best value for money. Bid-rigging arises when some or all of the bidders in a competitive tender attempt to frustrate the purpose of the competitive tender by limiting the degree of competition in it. They might, for example, agree between themselves not to submit tenders below a certain price; or inform each other of the prices at which they intend to submit tenders; or engage in “market sharing” by agreeing which of them will submit “winning” (i.e. competitively-priced) tenders for particular contracts, so that the range of contracts over a period is effectively carved up between them. Recent action against bidrigging It is indicative of the seriousness with which bid-rigging is viewed under competition law that, even in the past few months alone, there have been cases of action being taken against bidrigging by authorities and courts across the world. • Czech Republic: The regional court of Brno issued a judgment upholding fines that had been imposed by the Czech Competition Authority on five companies who had participated in a bid-rigging arrangement. The total fines amounted to 4.9 million Czech koruna (about £160,000, or €190,000, or US $250,000). The five companies had coordinated their conduct in public tenders for contracts to be awarded by the Czech defence ministry, by agreeing on the bidding price that they each offered. • South Africa: 15 major construction companies were investigated by South Africa’s Competition Commission for collusive tendering. In settlement agreements before the Competition Tribunal, the 15 companies admitted their illegal conduct, and agreed to pay substantial fines – for example, Basil Read agreed to pay a fine of 94 million rand (about £6 million, or US $9.3 million, or €7 million). That is by no means the end of the companies’ exposure: there have been numerous indications from customers, including governmental bodies, that they intend to pursue civil damages against the companies concerned