Bid Rigging Schemes

Bid rigging schemes are anticompetitive agreements where several parties agree in advance which party will win a commercial contract. Bid rigging schemes most commonly occur in situations where contracts are awarded by evaluating multiple competitive bids, such as government contract work.

In a bid rigging scheme, some parties can agree to not submit bids, or to submit bids that are too high or contain unacceptable conditions. In some cases, parties that are not designated to win the bid are promised subcontract work by the successful bidder.

Is bid rigging illegal?

Yes, anticompetitive bid rigging schemes violate federal antitrust law, notably the Sherman Antitrust Act, and are prohibited by state antitrust law, including the Cartwright Act in California.

Under federal and some state laws, private parties (businesses or consumers) who were harmed by anticompetitive rigging of a bidding process can bring antitrust lawsuits seeking damages (in some instance treble damages) and injunctive relief.

What exactly is bid rigging in competition law?

Under federal and state competition laws, bid rigging is when several parties coordinate or collude to rig a bidding process. Sometimes the bid rigging might take the form of deterring other competitors from entering bids. Bid rigging can also occur when the bidder and the entity that asked for bids (such as a local government agency) collude to pick a winner before the bidding process has even begun. Alternatively, several competitors could agree in advance to split the contract they are bidding on if any of them win, such as by hiring the others as subcontractors. Then, one of the competitors enters a bid, while the others enter unreasonably high bids to make the other bid look more competitive.

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