Definition
The explanation to sub-section (3) of Section 3, Competition Act, 2002 defines, ‘bid-rigging’ as “any agreement between enterprises or persons referred to in sub-section (3) engaged in identical or similar production or trading of goods or provision of services, which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding.”
Bidding, as a practice, is intended to enable the procurement of goods or services on the most favourable terms and conditions. Such collusive bidding or bid-rigging contravenes the very purpose of inviting tenders and is inherently anti-competitive.
Collusive bidding or bid-rigging may occur in various ways. Some of the most commonly adopted ways are:
Agreements to submit identical bids
Agreements as to who shall submit the lowest bid, agreements for submission of cover bids (voluntarily inflated bids)
Agreements not to bid against each other,
Agreements on common norms to calculate prices or terms of bids
Agreements to squeeze out outside bidders
Agreements designating bid winners in advance on a rotational basis
Forms of Bid-Rigging
Bid-rigging may take many forms, most widely being the following categories:
Bid-Supression: In such a scheme, one or more competitors who otherwise would be expected to bid, or who have previously bid, agree to refrain from bidding or withdraw a previously submitted bid so that the designated winning competitor’s bid will be accepted.
Complementary Bidding: Complementary bidding occurs when some competitors agree to submit such bids as to which will not be acceptable to the buyer. Such bids merely give an appearance of genuine competitive bidding.
Bid-Rotation: In such schemes, all conspirators submit bids to take turns to be the lowest bidder. The terms of the rotation may vary depending upon size of the contract.
Subcontracting: In such schemes, competitors who submit a losing bid, frequently receive subcontracts in exchange from the successful bidder.
Almost all forms of bid-rigging constitute an agreement among some or all bidders, which predetermines the winning bidder and limits or eliminates competition among the conspiring vendors.
Commentary
Economic Impact on Indian Market
Cartels and bid-rigging have a large and significant negative impact on the Indian market, reducing competition, customer welfare and overall market efficiency. These anti-competitive tactics raise prices, result in degrading the quality of products and services, and impede the creation of equal opportunities for enterprises.
In the post-COVID period, the risk of cartelisation has intensified across several sectors. The growing dominance of large enterprises not only enables price increases but also raises entry barriers for new participants. Notably, the top 20 Indian companies account for a substantial share of corporate earnings and cash flows, reflecting a trend towards market concentration. Such concentration may, in turn, facilitate coordinated conduct among firms, including bid-rigging1.
Bid-rigging has an impact on Indian government’s procurement process and public projects. When contractors participate in bid-rigging, the government ends up paying more than necessary for goods and services resulting in waste of taxpayer’s money. This not only influences the government’s capacity to spend taxpayer money efficiently, but it also limits the scope for public investment in key infrastructure and services.
Overall, the economic impact of bid-rigging in the Indian market is unfavourable for both consumers and enterprises. It results in increased pricing, lower quality, hindered innovation and inefficient resource allocation. To offset these consequences, Indian authorities must enforce strict antitrust rules, promote openness in procurement processes and impose severe penalties on individuals who engage in anti-competitive behaviour.
Detection of Bid-Rigging
Uncovering bid-rigging requires a mix of investigative tools, economic assessment and coordinated action among regulatory authorities in India. Competition authorities rely on multiple approaches to identify suspicious bidding behaviour and gather evidence for enforcement.
One of the primary techniques involves analyzing tender and contract data. By examining bidding patterns, authorities can identify irregularities such as inflated pricing, repetitive participation trends or the absence of meaningful competition. These indicators often signal possible collusive practices. In this regard, the OECD Guidelines provide a detailed checklist that assists procurement officials in recognizing warning signs of anti-competitive conduct during tendering processes.2
In addition, market intelligence plays a vital role in detecting bid manipulation. Authorities closely monitor industry developments, engage with stakeholders and stay informed through sectoral research and events. Indicators such as unusual shifts in market shares, consistent patterns in bidder behaviour or barriers to new entrants may point towards coordinated bidding practices.
Illustrative legal provisions across jurisdictions to address competition concerns
United States
The ‘Antitrust Guidelines for Collaborations Among Competitors, issued by the Federal Trade Commission [FTC] and the U.S. Department of Justice on April 2000 state bid-rigging as an illegal practice. The Department of Justice prosecutes participants in hard-core cartel agreements criminally.
The FTC lays down that individuals and companies that knowingly enter bid-rigging agreements are routinely investigated by the FBI and other federal law enforcement agencies and can be criminally prosecuted. Potential penalties include lengthy terms of imprisonment (up-to ten years) and large fines (up-to $1 million for individuals, $100 million for companies, or twice the gain or loss from the offence). Where appropriate, the FTC may also bring civil enforcement action.
European Union
Article 101 of the Treaty on the Functioning of the European Union explicitly prohibits3 agreements or concerted practices that have as their object or effect the prevention, restriction or distortion of competition within the internal market.
Since the adoption of the most recent generation of EU public procurement Directives in 2014, sufficiently plausible indications of collusion have, explicitly, became an optional ground to exclude an economic operator from an award procedure4.
India
Section 3(3)(d) of the Competition Act, 2002 (hereinafter referred to as ‘Act’) states that an agreement resulting directly or indirectly in bid-rigging or collusive rigging shall be void.
Section 19 of the Act, the Competition Commission of India (hereinafter referred to as ‘CCI’) is empowered to conduct an enquiry upon any alleged anti-competitive behaviour arising out of bid rigging. The Section expressly covers the powers of CCI to conduct an enquiry for any anti-competitive behaviour as per Section 3(1) of the Act. Bid rigging as an anti-competitive practice forms part of Section 3 as it is classified to cause an appreciable adverse effect on competition in India. Under Section 36(2) of the Act, the powers of the CCI are the same as that of a Civil Court.
Under Section 42 of the Act, the parties fail to comply with the order passed by the CCI, then the CCI may impose a fine extending up to INR one lakh for each day of non-compliance, the maximum penalty being INR ten crore. If the parties fail to pay the fine determined, then CCI can further impose a fine of INR twenty-five crore or even sentence the non-compliant party to an imprisonment of three years or both.
Legal Precedent
In “Re: Cartelization by public sector insurance companies in rigging the bids submitted in response to the tenders floated by the Government of Kerala for selecting insurance service providers for Rashtriya Swasthya Bima Yojana5”, the Keral State Government held a tender to choose insurance service providers for the Rashtriya Swasthya Bima Yojana for a three-year period. The CCI found four public sector insurance companies guilty of bid-rigging and levied exemplary fines worth INR 671 crores in total.
Nilanjan Banik, ‘Post-COVID, There’s a Danger of Cartels Forming in Many Sectors’ (The Wire, 23 June 2023) (Last accessed on 20 April 2026)↩︎
OECD, ’Detecting Bid Rigging in Public Procurement’ (Last accessed on 20 April 2026)↩︎
Information From European Union Institutions, Bodies, Offices and Agencies; ‘Notice on tools to fight collusion in public procurement and on guidance on how to apply the related exclusion ground’ (2021/C 91/01)↩︎
Article 57(4)(d) of Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65)↩︎
Suo Moto Case No. 02 of 2014↩︎
