Bid rigging in the EU public procurement markets

Abstract

EU competition law prohibits anti-competitive agreements between bidding companies which manipulate the outcome of tendering processes by pre-determining the winning bidder and suppressing competition among them thereby artificially raising the bid prices of the supplied goods and services. Similarly to other hardcore restrictions, such as price fixing and market sharing, which impair the integration of private markets in the EU by restoring artificial barriers among them, bid rigging occurring in government tendering in the EU prevents the opening up of EU public markets which would allow public procurement authorities to benefit from cross-border competition among suppliers.

For many years, the modest integration of EU public markets with moderate cross-border bidding has conditioned rare occurrence of the bid rigging phenomenon in these markets. In the recent 20 years, however, bid rigging has increasingly been at the centre of attention of the European Commission and national competition authorities. Mainly through the application of the leniency programme, widespread and endemic practice of bid rigging has been evidenced, in particular in the construction industry. While in bid rigging cartels with a European dimension, thousands of tenders have been allocated among economic operators along national market lines on the basis of a quota system, smaller (local) markets have suffered from collusive bidding among local bidding firms. Given the constant dealings of competition authorities with bid rigging from virtually every jurisdiction around the world, the OECD in 2009 published its guidelines for fighting bid rigging in public procurement. The guidelines’ recommendations put the emphasis on the role of procurement agencies in detecting and preventing bid rigging.

In this context, the thesis looks at the steps that the European Commission needs to undertake in order to foster competition enforcement against bid rigging; firstly, by addressing the issue of the cooperation between competition authorities and public procurement authorities in the EU in tackling bid rigging in public tendering; and secondly, by ending fragmentation of competition enforcement among EU Member States and securing the minimum required standard of harmonisation of competition enforcement throughout the EU.