Bid-Rigging in Latest CCCS Infringement Decision
The Competition and Consumer Commission of Singapore (CCCS) just announced significant penalties (>S$4.6 million) against two contractors for bid-rigging in PA tenders for community club upgrading works in an infringement decision against Trust-Build Engineering & Construction Pte Ltd. and Hunan Fengtian Construction Group Co., Ltd.
What is Bid-Rigging?
It’s when businesses that should be competing independently for a tender secretly agree on aspects of their bids. Eg:
~ Agreeing on who should “win” the tender.
~ One bidder submitting a deliberately high “cover bid” so another’s lower (but still inflated) bid looks attractive.
~ Agreeing not to bid at all, or to withdraw a bid.
In this case, CCCS found that a contractor prepared the tender submissions and proposed bid prices for the other, eliminating competition, although neither ultimately won the tenders because PA noticed potential bid rigging conduct before awarding tender.
Having handled competition infringement cases and appeals, I’d highlight some key legal issues in bid rigging cases:
~ The Competition Act catches formal agreements and also informal understandings, “concerted practices” or even a coordinated pattern of behaviour where competitors knowingly substitute cooperation for the risks of competition can be enough to prove collusion. Even just informally exchanging commercially sensitive information (like bid price) with a competitor before submitting a tender can be potentially infringing.
~ Anti-competitive “object”; market harm unnecessary: Bid-rigging is considered to have its very purpose or “object” to distort competition, so CCCS generally doesn’t need to prove that the bid-rigging actually harmed the market or led to higher prices (though it often does). Once bid-rigging conduct is established liability is found.
While every case is fact-specific, businesses under investigation for bid-rigging might consider:
~ Arguing that the evidence does not establish any any bid rigging conduct. Or that any similar bidding behaviour was coincidental or based on independent assessment of the tender, not a result of collusion.
~ Arguing that CCCS has not followed due process in its investigation and decision-making. Decisions can be appealed to the CAB.
~ Even if infringement is found, companies can submit factors that might reduce the financial penalty, such as the limited scope or duration of involvement, cooperation with the CCCS, or the implementation of robust compliance programmes post-discovery.
~ CCCS has a leniency programme where the first party to report a cartel activity and cooperate may receive immunity or significant reductions in penalties.
Bid-rigging is bad for business – hefty fines, reputational damage, and potential disqualification from future tenders.
