Public procurement—the process by which public authorities purchase goods, services, and works—is a cornerstone of the European Union’s economy. Annually, over 250,000 public authorities across the EU spend approximately 14% of the bloc’s gross domestic product on public contracts. This enormous expenditure is meant to fuel economic growth, foster innovation, and ensure public funds are spent efficiently. However, a silent threat lurks within this system: bid rigging. This sophisticated form of collusion among competing firms distorts the competitive process, leading to inflated prices and substandard quality, ultimately harming The scope of this problem is significant. Studies by organizations like the OECD and the European Commission suggest that bid rigging is a frequent occurrence, impacting a substantial number of public contracts. While precise figures are hard to pin down due to the covert nature of the crime, estimates indicate that bid rigging can inflate contract prices by 20% to 30% or more. This translates to billions of euros in lost public funds each year, making it a widespread and costly problem that directly undermines the efficiency and integrity of the procurement system.axpayers and the public interest.
The scope of this problem is significant. Studies by organizations like the OECD and the European Commission suggest that bid rigging is a frequent occurrence, impacting a substantial number of public contracts. While precise figures are hard to pin down due to the covert nature of the crime, estimates indicate that bid rigging can increase the costs that public buyers pay compared to what they would pay under normal market conditions by up to 60%. This translates to billions of euros in lost public funds each year, making it a widespread and costly problem that directly undermines the efficiency and integrity of the procurement system.
My new monograph, “Competition Law and Collusion in Public Procurement” (Routledge 2025), delves into this critical issue. It argues that despite the significant legislative reforms, particularly the adoption of the European Procurement Directive 2014/24/EU, the current framework is not sufficiently equipped to prevent bid rigging. The book provides a comprehensive, and at times critical, analysis of how the design of procurement procedures and enforcement mechanisms can either facilitate or deter this anti-competitive behaviour. This analysis is particularly timely, as President Ursula von der Leyen has announced a revision of the public procurement directives in the Political Guidelines 2024–2029 for the next European Commission, and an evaluation of Directive 2014/24/EU is currently underway to assess its effectiveness in promoting a high level of competition in the single market.
The Problem with the Current Framework
For years, the EU’s public procurement rules have been shaped by a focus on transparency and non-discrimination, aiming to dismantle national trade barriers and create a single internal market. While this approach has had undeniable benefits, it has largely failed to address the specific problem of collusion among bidders. As a result, the procurement regime and competition law have evolved on separate tracks, creating a disjointed approach to a common problem.
Bid rigging is not a fringe issue; it is a widespread and deeply ingrained phenomenon. From construction projects to IT services and medical supplies, numerous cases across Europe have exposed cartels that have cost taxpayers billions In England, for example, a major investigation in 2009 found over a hundred construction companies involved in bid rigging on public sector projects like schools and hospitals. The European Court of Auditors has also highlighted a worrying decline in competition for public contracts over the last decade, a trend that underscores the urgency of this issue.
My research uses auction theory—a powerful tool from economics—as a benchmark to systematically evaluate the risks of collusion in EU procurement. Auction theory provides a framework for understanding how bidders act and how the design of a bidding process can either encourage or discourage collusion. This perspective reveals that many of the existing procurement rules, while well-intentioned, contain structural weaknesses that make them vulnerable to exploitation by determined colluders.
Phase 1: Procurement Planning – Where the Ground is Laid for Collusion
The first phase of the procurement process, known as “procurement planning,” is where contracting authorities define their needs and prepare for the tender. This stage, though seemingly innocuous, is a critical battleground against collusion. My book identifies three key areas where the current rules fall short.
First, the monograph scrutinizes the practice of preliminary market consultations. While these dialogues are intended to help contracting authorities gather information and refine their requirements, they can inadvertently create a fertile environment for collusion. When public officials meet directly with a small group of potential suppliers, especially for complex or innovative projects, they risk facilitating the formation of bid rigging agreements before the tender even begins. The current rules are too vague on how these consultations should be conducted, allowing for practices that can expose new entrants to established players and enable colluders to coordinate their strategies.
Second, I address the formulation of technical specifications. The Directive requires that specifications be open to competition and not favour a specific product or company. However, the legal and practical ambiguity of the term “or equivalent” leaves a critical loophole. Public officials often have discretion to define what constitutes an “equivalent” product, and if this discretion is used narrowly or unfairly, it can limit the number of qualified bidders. This creates a concentrated market with fewer competitors, making it easier for them to form a bidding ring. The problem is compounded by a general industry distrust of product substitution, which further discourages suppliers from bidding on contracts with strict, brand-specific requirements.
Third, the book examines the division of contracts into lots. This practice is widely seen as a way to promote small and medium-sized enterprise (SME) participation and boost competition. However, improperly structured, it can become a tool for colluders to “share the spoils.” When a single public authority awards multiple similar contracts, it creates a perfect opportunity for bidders to coordinate who wins which lot, ensuring that each member of the cartel gets a piece of the pie. A common form of this collusion is geographic coverage, where competitors agree not to bid in certain regions, leaving a specific area open for one member. This can be seen in the Belgian rail sector, where the competition authority found firms coordinating bids based on the regional location of rail contracts.
While economic theory offers some rules of thumb for lotting, such as ensuring the number of lots is smaller than the number of bidders, these rules are often ignored or poorly implemented in practice, with the current Directive providing inadequate guidance.
Phase 2: The Contracting Phase – Exploiting Procedural Weaknesses
The second phase, the “contracting phase,” involves the actual bidding process. My monograph highlights how the design of various procurement procedures and techniques can heighten the risk of bid rigging.
I argue that open and restricted procedures, while fundamental, present a challenge due to the wide discretion given to contracting authorities. Choosing a restricted procedure, for instance, can limit the number of bidders, making it easier for a small group of suppliers to collude. This is a particular risk in markets where corruption may influence the selection process. To address this challenge and reduce the opportunity for collusion, it is essential to rebalance the default approach to procurement. Therefore, the book recommends that the open procedure should be the default, with specific, justifiable exceptions for using more restrictive methods. This shift in policy would directly counter the risk posed by overly broad discretion by promoting transparency and increasing competition.
Similarly, I analyse the use of the negotiated procedure without prior publication. This exceptional procedure, reserved for circumstances like extreme urgency or for technical reasons where only a single supplier exists, is a prime target for abuse. When a contract is awarded to a consortium without an open call for competition, it can be a front for a cartel, especially in technologically complex sectors. To combat this, I suggest making the use of a Voluntary Ex Ante Transparency Notice (VEAT) mandatory. This would force contracting authorities to justify their decision publicly and provide other firms an opportunity to challenge the award.
The book also scrutinizes framework agreements and electronic auctions. Framework agreements, designed for efficiency, can become “closed” systems that exclude new entrants for years, creating stable, oligopolistic markets ripe for collusion. I recommend measures to introduce flexibility, such as allowing new firms to join existing frameworks under certain conditions. For electronic auctions, while they promote transparency, they also create an environment where colluders can easily monitor each other’s bids and enforce their agreements. My research suggests reducing the amount of real-time information shared with bidders and varying auction closing rules to disrupt these collusive tactics.
Phase 3: A Clashing of Enforcement Regimes
A well-designed procurement process is only one part of the solution. My monograph also examines the policies used by competition regulators to fight bid rigging, arguing that they are often at odds with procurement remedies.
The core of this conflict lies in the tension between the leniency programme and debarment. A leniency programme offers immunity or reduced fines to a company that reports its involvement in a cartel. It is a crucial tool for uncovering secret agreements. However, the procurement regime’s debarment mechanism imposes a ban on a company from public contracts for up to three years if found guilty of an antitrust violation. This creates a “chilling effect,” as a company might be reluctant to apply for leniency if it risks losing its ability to compete for public work for years. This risk exists despite the presence of “self-cleaning” mechanisms, which allow a company to avoid debarment by taking proactive corrective measures. For instance, companies can demonstrate their remorse by cooperating with the investigation, paying damages, and implementing robust internal compliance programmes.
My book argues that these self-cleaning provisions often do not provide sufficient certainty to overcome the fear of debarment, especially when compared to the guaranteed immunity of a leniency programme. It proposes reforms to harmonize these conflicting objectives, such as granting leniency recipients an exemption from debarment to encourage self-reporting and strengthen the fight against cartels.
Furthermore, I explore the challenges facing private enforcement, arguing that even with the EU Competition Law Damages Directive, public authorities struggle to recover damages from colluders. They face high litigation costs, difficulty in quantifying harm, and a lack of specific tools to prove the existence of a cartel. The monograph proposes several innovative solutions to this problem. First, I propose the creation of a “Competition Damages Litigation Fund.” This fund would be a pooled resource, supplied by contracting authorities, to cover the costs of litigation for competition damages. By collecting and saving money from damages awarded by national courts for anti-competitive activities in public procurement, the fund would allow public authorities to mitigate financial risk and pursue compensation more effectively. Second, I suggest making liquidated damages clauses a standard part of public contracts. While a contract won through a cartel may be deemed void, a liquidated damages clause can still simplify the process of claiming compensation by providing a predetermined method for calculating the damages caused by the cartel. Instead of proving the precise financial harm in court, the public authority could rely on this pre-agreed-upon formula. This approach would streamline the often-complex and lengthy legal process of seeking restitution for anti-competitive behavior. l
Finally, the book highlights the untapped potential of whistleblowing. The EU Whistleblower Protection Directive is a step in the right direction, but it lacks key incentives found in the successful U.S. model. The U.S. False Claims Act for instance, provides substantial monetary rewards and legal protection to whistleblowers who report fraud, including bid rigging. This creates a powerful incentive for insiders to come forward, providing authorities with crucial evidence to prosecute cases that would otherwise remain hidden. I argue that incorporating similar financial incentives into the EU framework is essential to truly empower individuals to combat corruption in public procurement.
Based on my analysis, the advantages of the U.S. financial incentive whistleblower programme outweigh its disadvantages, as it has proven to be highly effective. The U.S. Department of Justice can use the False Claims Act in conjunction with criminal and antitrust statutes to secure substantial recoveries and substantial monetary rewards for whistleblowers. This model is effective because it resolves challenges that European contracting authorities often face, such as collecting evidence and quantifying financial harm. While U.S. qui tam (whistleblower) lawsuits can be protracted, taking years to resolve, and the collaboration between different Departments of Justice can be challenging, the system’s ability to provide significant recoveries and incentives has made it a powerful tool in the fight against bid rigging. While the legal and economic frameworks of the U.S. and Europe differ—for instance, in how public authorities operate—the core problem of bid rigging and its economic harm to taxpayers are universal. Therefore, the success of the U.S. model in generating whistleblowers and recovering damages offers valuable lessons for Europe, particularly in supplementing its existing public enforcement efforts.
A New Approach to Enforcement: The Role of Structural Remedies and Donations
Beyond traditional enforcement tools, my monograph explores antitrust remedies like divestiture and donations as a new approach to tackling bid rigging. Divestiture, which is the partial or full sale of a business unit, modifies market structure by creating new competitors or reallocating capacity, thereby making future collusion less likely. The book argues that divestitures, while a valuable addition to the enforcement toolkit, are inadequate as compensatory remedies for bid rigging in European public procurement. Their primary purpose is to restore competitive market structures for future consumers, not to compensate past victims, which conflicts with the goal of returning harmed public authorities to their pre-collusion position. In the EU, the use of such structural remedies is restricted by the principle of proportionality, meaning they can only be applied as a last resort in cases where there is a substantial risk of lasting or repeated infringement. Therefore, divestitures are a powerful deterrent against cartels and recidivism but must be compatible with EU principles and should not be imposed on debarred firms to avoid severe economic disruption.
My monograph also argues that donations can be a viable alternative to damages claims for bid rigging, provided specific criteria are met. This approach involves a company settling a case by agreeing to voluntarily contribute a sum of money to a project, instead of engaging in a complex legal battle to prove damages. Donations include clearly defining the project, ensuring a strong link between the donation and the underlying violation, and aiming to mitigate the detrimental effects of the misconduct. This approach, demonstrated in recent U.S. Department of Justice settlements, offers a creative way to remedy past harm without the complexities of traditional damages litigation.
A Path Forward
The argument of my monograph is clear: the current EU public procurement framework, while reformed and modernized, is not fully equipped to combat the persistent threat of bid rigging. This is because the EU’s procurement directives were primarily designed to ensure fair treatment of bidders, prevent discrimination, and guarantee a single market. They are also focused on the relationship between the contracting authority and individual bidders. They were not explicitly designed to detect and deter collusion among the bidders themselves. Of course this doesn’t mean that the EU’s original intent was wrong, but that the framework needs to evolve to address a problem it wasn’t designed to handle effectively.
To create a truly competitive, fair, and transparent system, policymakers must move beyond simply promoting open markets. They must actively design procurement rules with anti-collusion measures at their core, drawing on insights from fields like auction theory and comparative law. This requires a coordinated approach between national and EU-level procurement and competition regulators, a new focus on practical, enforceable solutions, and a willingness to learn from international best practices. By taking these steps, we can ensure that public money is spent wisely, competition thrives, and taxpayers get the value they deserve.
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Posted by Dr. Penelope Giosa (Lecturer in Law at the University of Reading)