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Screening for Bid-rigging. Does it Work?

Author

Listed:
  • 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)

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.

Suggested Citation

  • David Imhof & Yavuz Karagök & SAMUEL RUTZ, 2017. "Screening for Bid-rigging. Does it Work?," Working Papers 2017-09, CRESE.
    • Handle: RePEc:crb:wpaper:2017-09
    DOI: https://doi.org/10.1093/joclec/nhy006
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    bid-rigging; screening method; variance screen; cover bidding screen; bid rotation test; partial collusion;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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