COVER BIDDING is a common type of bid-rigging
Bid rigging occurs when a group of bidders unlawfully band together to devise strategies to reduce competition in a bidding process and determine the bid winner. Common types include cover bidding, bid rotation, bid suppression and non-conforming bid.
In simple terms, bid rigging is fraud which involves bidding. It is an agreement among competitors as to who will be the winning bidder. Bid rigging occurs when a purchaser solicits bids to purchase goods or services. The bidders agree in advance who will submit the winning bid.
Bid rigging is an illegal practice in which competing parties collude to determine the winner of a bidding process. When bidders coordinate, it undermines the bidding process and can result in a rigged price that is higher than what might have resulted from a free market with a competitive bidding process.
Cover bidding takes place when tendering parties submit bids that are too high to be accepted, or with terms that are unacceptable to the party calling for bids, to protect an agreed upon low bidder.
Confidentiality is a highly pertinent issue in public procurement challenges. Challengers often seek disclosure of the winning bidder’s tender, together with all of the contracting authority’s associated evaluation and scoring materials. This documentation inevitably contains commercially sensitive information that the winning bidder wishes to keep confidential and out of sight of its competitors (including the challenger). The principle of open justice (a common law principle that proceedings and any related documents should be open to the public) normally requires disclosure of all documents relevant to the issues in the case. However, disclosure of commercially sensitive information to a competitor might result in commercial advantage and/or distortions in the market. A tension can occur between the need for open justice and the preservation of confidentiality.
The IPCom case actively encouraged the use of ‘lawyers-only’ confidentiality rings, where lawyers are the only parties to the confidentiality ring, reasoning that lawyers are bound by a professional code of conduct. This is perceived as ensuring the confidentiality of commercially sensitive documentation. Lawyers-only rings were commonplace.
We propose two layers of confidentiality rings: one for lawyers and the other for designated employees of the challenger. More stringent requirements were placed upon the designated employees through appropriate undertakings, in order to protect confidential information
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Source. Daily Mail 23 March 2023:
The CMA has issued a decision finding 10 suppliers of demolition and asbestos services breached competition law by taking part in bid rigging, in the form of cover bidding.
Fines totalling almost £60 million have been imposed on:
- Brown and Mason Group Ltd (‘Brown and Mason’) https://brownandmason.com/
Brown and Mason remains a family owned and run, private limited company. Our recent audited accounts (for the year ended 30th April 2017) show a turnover increase of 35% to £47 million, achieved by our directly employed workforce of over 400 individuals.
- Cantillon Ltd, Cantillon Holdings Ltd (together ‘Cantillon’)
https://www.cantillon.co.uk/
- Clifford Devlin Ltd (‘Clifford Devlin’)
- DSM Demolition Ltd, DSM SFG Group Holdings Ltd, Nobel Midco Ltd, Nobel Topco Ltd (together ‘DSM’)
- Erith Contractors Ltd, Erith Holdings Ltd (together ‘Erith’)
- John F Hunt Ltd, John F Hunt Group Ltd (together ‘John F Hunt’)
- Keltbray Ltd, Keltbray Holdings Ltd (together ‘Keltbray’)
- McGee Group (Holdings) Ltd, MFCOIL Ltd (together ‘McGee’)
- T. E. Scudder Ltd, P.J. Carey Plant Hire (Oval) Ltd, Carey Group Ltd (together ‘Scudder’)
- Squibb Group Ltd
Brown and Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee and Scudder were handed reduced fines as settling parties who had admitted their involvement in the cartel activity. McGee’s and Scudder’s penalties also include a discount under the CMA’s Leniency programme.
Provided they comply with the terms of the settlement, any fines of the settling firms will be discounted to reflect the resource savings to the CMA generated by the firms’ admissions and their cooperation with the CMA’s investigation. The final level of any fines will be decided by a new case decision group, in accordance with the CMA’s administrative process.
Scudder and McGee also reported their involvement in the conduct under the CMA’s leniency policy and will also benefit from a leniency discount on any fines, provided they continue to co-operate and comply with the other conditions of the CMA’s leniency policy.
The CMA’s investigation into 2 further companies, Erith Contractors Limited and Squibb Group Limited continues and no assumption should be made that they have infringed the law