Cartels in Public Procurement

Heimler, Alberto

doi:10.1093/joclec/nhs028

Cited by 11 publications

(4 citation statements)

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“…Among the cartels that were discovered by the European Commission during the period 1998-2010, most cartels included 5-6 members. Only 14% included more than 10 cartel members (Heimler, 2012).…”

Section: Independent Variable-single Bidder Winner Ratiomentioning

confidence: 99%

Firm performance, imperfect competition, and corruption risks in procurement: evidence from Swedish municipalities

Wittberg,

Fazekas

2023

Public Choice

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Previous research has shown that corruption risks may distort market incentives in high-risk contexts. However, there is a dearth of evidence on the potential impact of corruption in settings characterized by low corruption and high-quality institutions. Against that background, this paper delves deeper into the alleged consequences of corruption by examining the link between corruption risks in public procurement and the profitability of firms in the Swedish construction industry. We introduce a novel measure of corruption risk based on the share of single bidder contracts that a firm has won. Validity analysis confirms that our measure is correlated with an alternative corruption measure and local tender winners. Our results reveal that firms that win many single bidder contracts have higher profitability than other firms in the sector: 10 percentage points higher single bidding rate firms have a 0.2–0.6-percentage-point higher sales margin. The findings underscore that public procurement corruption risks distort markets and economic incentives, and that this risk is present even in low-corruption contexts such as in Sweden.

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Section: Independent Variable-single Bidder Winner Ratiomentioning

confidence: 99%

Firm performance, imperfect competition, and corruption risks in procurement: evidence from Swedish municipalities

Wittberg,

Fazekas

2023

Public Choice

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“…2. Heimler (2012) emphasize that pro-collusive forces in public procurement markets are such that cartels tend to be more stable than in other markets. For instance, both in the Netherlands and in the UK a construction cartel with approximately 100 members was detected.…”

Section: Audit Consulting Servicesmentioning

confidence: 99%

A case study on bid rigging in centralized procurement of audit consulting services in Italy

Albano

Santocchia

2022

JOPP

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Purpose The aim of this case study is to review the in-depth (and successful) investigation carried out in 2016 by the Italian Competition Authority [Autorità Garante della Concorrenza e del Mercato (AGCM)] on a nation-wide (multi-lot) framework agreement for consulting services. We also critically assess the tender design and emphasize which dimensions may have facilitated the uncovered anticompetitive agreement. Design/methodology/approach The case study borrows from the official Antitrust Authorities’ findings and from the tender documents to paint a comprehensive picture of the cartel’s strategy. Findings The case study emphasizes that AGCM’s the “conjectured logic” of the cartel’s behaviour (endogenous evidence) did coincide with those pieces of evidence seized by police forces for criminal crimes at the cartel members’ premises (exogeneous evidence). This infrequent feature of bidding rings investigations underlines the importance of theoretical as well as practical analyses of cartels’ behaviour in public procurement markets. Social implications As the antitrust investigation was triggered by a confidential report sent by the awarding authority (Consip, the Italian national central purchasing body), the case study also emphasizes the importance of informal as well as formal co-operation between awarding authorities, especially central purchasing bodies, and competition authorities. Originality/value The case study belongs to a small set of applied research papers attempting at building a bridge between public procurement design, particularly of sizeable framework agreements, and the mechanisms devised by cartels to “game” procurement procedures. All this is accomplished by looking at all design dimensions that were exploited by cartel’s members.

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“…121 Relatedly, Heimler observes that despite the inherent instability of cartels with many participants, those detected in public procurement provide evidence that even bid rigging schemes with up to 100 members can operate successfully over years. 122 that unnecessarily exclude alternative suppliers. 123 Such measures are an important example of state measures and practices that directly limit competition and (potentially) facilitate private anticompetitive conduct (i.e., collusion).…”

Section: The Gpa's Role In Deterring Inter-supplier Collusionmentioning

confidence: 99%

The Revised WTO Agreement on Government Procurement (GPA)

Anderson¹,

Müller²

2017

WTO Working Papers

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The WTO's plurilateral Agreement on Government Procurement ("the GPA" or "the Agreement") is an important ongoing success story for the Organization. In March 2012, the GPA Parties completed a comprehensive revision of the Agreement, encompassing both its text and coverage (market access commitments). The revised GPA, the negotiating processes that led to its adoption and coming into force, and the continuing gradual broadening of its membership are of therefore interest for the evolution of the international trading system. The GPA's successful renegotiation, the continuing growth of its membership and its vitality as an instrument of public policy were not achieved through happenstance. The paper discusses a number of specific design features of the GPA that clearly facilitated the successful conclusion of the renegotiation and that, as such, may in the future be relevant to other areas of global trade liberalization. In addition to the Agreement's plurilateral nature, of particular interest are the approach taken with respect to application of the most-favored-nation (MFN) principle in the Agreement; the GPA's continuing strong emphasis on principles of reciprocity in market access concessions; and its approach to special and differential treatment for developing countries, in all of which it differs from approaches that are widely used in other WTO Agreements.Apart from the above, the GPA revision is important for the merging of trade and good governance concerns that it exemplifies. As discussed in the paper, the themes of governance and the sound management of public resources that are treated in the revised Agreement were not afterthoughts to the renegotiation; rather, they permeated the revised text and received focused attention from the Parties in their own right. As well, the GPA has direct implications for investment policy and for domestic economic reforms, and is an important tool of e-commerce. And, the revision has made possible very significant synergies between the GPA and other international instruments and activities in reducing barriers to participation and strengthening governance in public procurement markets. For all these reasons, the revised Agreement is likely to have a wider impact than meets the eye, and well merits the support and attention that it has received from the participating WTO Member governments.

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Cartels in Public Procurement

Cited by 11 publications

References 0 publications

Firm performance, imperfect competition, and corruption risks in procurement: evidence from Swedish municipalities

Firm performance, imperfect competition, and corruption risks in procurement: evidence from Swedish municipalities

A case study on bid rigging in centralized procurement of audit consulting services in Italy

The Revised WTO Agreement on Government Procurement (GPA)

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