Bid-rigging is a criminal offence defined by section 47 of the Competition Act and occurs when each of the following four elements are met:
- There was a call for tenders;
- There was an agreement between two or more bidders where:
One or more agrees to not submit a bid, OR to withdraw a bid, OR
Two or more submit bids that were arrived at by agreement or arrangement;
(This section does not apply to companies that are affiliates.)
- Bids were submitted in response to the call for tenders;
- The person who called for the tenders was not made aware of any agreement or arrangement, at or before the bids were submitted.
Because bid-rigging is a criminal offence, each of these elements must be proven beyond a reasonable doubt.
Any party to the agreement or arrangement must explicitly notify the tendering authority of the agreement or arrangement to avoid liability under this offence. It is not enough that the tendering authority ought to have known there was an agreement because of past practice or because identical prices were submitted.
Bid-rigging schemes are harmful to private and public sector organizations because they incur the initial cost of establishing a tendering process, which is then undermined by a covert scheme to charge them higher prices, and deprives them of the other benefits of competition. These higher prices are often borne by consumers and taxpayers.
The Act therefore provides for severe punishments for those individuals and corporations found guilty of this offence. Individuals and corporations may be sentenced to a fine in the discretion of the court because there is no maximum fine level. In addition, individuals may also be further liable to imprisonment for a term up to fourteen years.
Visit our Bid-rigging pamphlet for more useful information.
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