Screening for Bid-rigging. Does it Work?

David Imhof (), Yavuz Karagök () and Samuel Rutz ()
Additional contact information
David Imhof: Secretariat of the Swiss Competition Commission, Université Bourgogne Franche-Comté, CRESE
Yavuz Karagök: Secretariat of the Swiss Competition Commission
Samuel Rutz: Avenir Suisse

No 2017-09, Working Papers from CRESE

Abstract: This paper proposes a method to detect bid-rigging by applying mutually reinforcing screens to a road construction procurement data set from Switzerland in which no prior information about collusion was available. The screening method is particularly suited to deal with the problem of partial collusion, i.e. collusion which does not involve all firms and/or all contracts in a specific data set, implying that many of the classical markers discussed in the corresponding literature will fail to identify bid-rigging. In addition to presenting new screens for collusion, it is shown how benchmarks and the combination of different screens may be used to identify subsets of suspicious contracts and firms. The discussed screening method succeeds in isolating a group of 'suspicious' firms exhibiting the characteristics of a local bid-rigging cartel with cover bids and a more or less pronounced bid rotation scheme. Based on these findings the Swiss Competition Commission (COMCO) opened an investigation and sanctioned the identified 'suspicious' firms for bid-rigging in 2016.

Keywords: bid-rigging; screening method; variance screen; cover bidding screen; bid rotation test; partial collusion (search for similar items in EconPapers)
JEL-codes: C00 C40 D22 D40 K40 L40 L41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2017-06
New Economics Papers: this item is included in nep-com and nep-law
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Published in Journal of Competition Law & Economics, Volume 14, Issue 2, June 2018, Pages 235–261

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Persistent link: https://EconPapers.repec.org/RePEc:crb:wpaper:2017-09

DOI: 10.1093/joclec/nhy006

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