BID RIGGING IN INDIA & A

COMPARATIVE STUDY WITH

REFERENCE TO FOREIGN

COUNTERPARTSBY: PARAM TANDON

BLS/LL.B 5th YEAR

Dr. D. Y. PATIL COLLEGE OF

LAW

MUMBAI

WHAT IS BID RIGGING ?Bid rigging is a form of fraud in which a commercial contract is

promised to one party even though for the sake of appearance

several other parties also present a bid. This form of collusion is

illegal in most countries. Bid rigging is anti-competitive because by

colluding, these bidders keep the bid amount at the

pre-determined level.

TYPES OF BID RIGGING

Bid suppression

Complementary bidding

Bid rotation

subcontracting

Market Division

Buy-Back

Phantom Bids

Harm to the Economy

Increases the cost to the consumers.

Potential wastage of tax payer can be significant

Pushes up contract prices by 20 to 30 percent

Harm to the Economy

Eliminating competitors

Reduction in quality standards.

Damage the credibility of

lending institutions, such as the World

Bank

DETECTING BID RIGGING

Receive identical bids or close amount of number from different

companies

There is some indication of a physical alteration of bids, particularly at the last minute

The range of bids shows a clear gap between the winner and all others

All companies submit high bids when the cost for work are less on

paper

Qualified bidders do not bid especially if they initially took steps

to bid

If a contract is re-bid because all initial bids are unacceptable, the

bidders come back in the same order or some bidders fail to re-

bid

WAYS TO REDUCE RISK OF BID RIGGING

• Develop prior information about the market

• Encourage participation in the procurement process

• Avoid predictability in tender process

• Reduce opportunities for communication among bidders

• Provide clear evaluating and award criteria

BID RIGGING– AROUND THE GLOBE

ESTIMATED PUBLIC PROCUREMENT LEVELS IN ASIA

PENELTY FOR BID RIGGING IN INDIA

THE COMPETITION ACT, 2002

IF SECTION 3(3)(d) VIOLATED

SECTION 27(b)

₹ PENALTY UPTO 10% OF AVERAGE TURNOVER OF 3 PRECEDING FINANCIAL YEARS

Section 190 of Enterprise Act 2002:1)A person guilty of an offence of Bid Rigging is liable— (a)on conviction on indictment, to imprisonment for a term not exceeding five years or to a fine, or to both;

(b)on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or to both.

PENALTY FOR BID RIGGING INUNITED KINGDOM

U.S.SHERMAN ACT PENALTIES FOR BID RIGGING

Fine up to $10,000,000 for corporations.

Fine up to $350,000 and/or 3 years in prison for individuals.

Responsible for restitution to victims.

Possible civil suits for up to 3x the amount of damages suffered.

According to Indonesia’s competition law,

• The Commission can impose civil fines up to

Rupiah 25 billion (US$2.7mn) for violations of

the law or criminal fines.

• up toRupiah 100 billion (US$2.3bn) and a prison

term of up to six months, as sanctions for bid

rigging.

BID RIGGING PENALTIES ININDONESIA

Participants in illegal bid rigging are sentenced to a maximum two-year prison term or fined a maximum Y2.5 million.

BID RIGGING PENALTIES IN JAPAN

ANTI-MONOPOLY LAW

• No limit on fines

• Jail term up to 14 years for

individuals(S. 47(2))

• Victims have a statutory right to

sue perpetrators to recover damages

caused by bid-rigging (s. 36)

• Criminal record may be registered

with the Canadian Police Information

Centre (CPIC)

PENALTIES FOR BID RIGGING IN CANADA

Maximum 10 % of WORLDWIDE TURNOVER

ENTERPRISE (any

entity)

PENALTIES

SECTION 4 AND 10 OFFENDERS

ENTERPRISEISE

PENALTIES FOR BID RIGGING IN MALAYSIA

Non-compliance has serious consequences:

• Fines up to 10% of annual worldwide turnover

• Liability in damages under national law

• Voiding of contract

• Criminal liability

• Substantial expenditure of time and money

• Bad publicity

• Investigations by other competition authorities

CONSEQUENCES OF BID RIGGING INEUROPEAN UNION

INDIA• MONETRY FINE• NO IMORISONMENT

U.S.

• MONETRY FINE

• IMPRISONMENT

U.K.• MONETRY FINE• IMPRISONMENT, OR BOTH

INDONESIA

•MONETRY

FINE

• IMPRISONMEN

T

JAPAN

•MONETRY

FINE

• IMPRISONMEN

T

CANADA

• MONETRY FINE( NO LIMIT)

• IMPRISONMENT• RECOVERY TO VICTIM

• CRIMINAL RECORD

MALASIA

•MONETRY FINE

• NO IMPRISONMENT

EU•MONETRY FINE

•CRIMINAL LIABILITY

BID RIGGING PENALTIES

COMPARISON

FINE