Multi-media References

In this illegal practice, two or more bidders, who would otherwise be expected to compete, agree (usually in secret) not to compete with one another for particular projects and conspire to pre-determine the outcome of tenders. Bid-rigging can occur in any market where tender processes are used.

Various forms of bid-rigging include:

• Bid suppression - One or more competitors agree not to bid, or withdraw a bid submitted previously
• Cover bidding - Certain bidders agree to submit bids with higher prices or less attractive (or unacceptable) terms than the bid of the designated winner
• Bid rotation - Competitors agree to take turns to win in a series of contracts
• Competitors agree not to bid or to submit a cover bid in exchange for subcontracts with the designated winner
• Bidders agree on the minimum bidding prices or that the winning bidder will make a payment to compensate the "losing" bidders

Competition is harmed when competitors agree on pricing rather than making price decisions independently. Price fixing may take different forms, for example, competitors may directly agree on a specified price, or they may agree on a formula to calculate prices or elements of a price.

Examples of a price element includes:

• Discounts
• Rebates
• Promotions
• Credit terms

Price fixing can be achieved:

• Verbally or in writing
• An agreement need not be formal nor legally binding. It can be an informal arrangement, understanding, or undertaking.
• Via a trade association or professional body e.g. an association may issue recommendations on prices or publish (possibly non-binding) fee scales for members to follow

Competitors selling products at the same price is not necessarily evidence of price fixing

• In markets where the product sold is the same or very similar, if you know that pricing a little higher than your competitor means you lose a lot of customers, and pricing below your competitor means your competitor will quickly match your price, prices naturally tend to gravitate towards the same price. This does not require any arrangement between competitors to occur.

Competitors may secretly agree to divide up a market so they each have allotted portion of the market without facing competition. Market sharing is considered harmful to competition even if it is a mere understanding that the parties to the agreement will not supply a competitor's existing customers, or will encourage such customers to stay with their existing supplier should the customers seek to switch supplier.

Competitors engaged in market sharing may agree:

• not to compete in the production of certain products (e.g. Company A agrees it will only produce product X, while Company B agrees it will only produce product Y)
• not to sell in each other's agreed territories
• not to compete for each other's customers
• not to enter or expand into a competitor's market