COMPETITION • FRENCH LAW • RESTRICTIVE AGREEMENTS
The competition authorities have defined bid rigging as the practice whereby undertakings bidding for a public contract giving rise to a public call for tenders concert with each other prior to submitting their bids (Report of the Competition Commission, 1987). This practice means that each undertaking has access to information on the content of the proposals of other competitors and is able to calculate its bid no longer solely on the basis of the conditions under which it could best respond to the demand formulated, but on the basis of what it knows about the proposals of other undertakings consulted. The exchange of information between undertakings bidding for the same contract prior to the actual submission of their bids – except where this exchange results in the submission of a joint bid – is such as to limit the intensity of competition between the undertakings taking part, whether this exchange concerns the prices likely to be offered, the technical means to be used or the reality of the interest in winning the contract.
The Competition Authority considers that bid rigging pursues an anticompetitive object which exempts it from having to verify the existence of an effect on the market. It distinguishes between the bid submitted by the undertaking designated to be the lowest bidder for the contract and which will have, if not the certainty, at least the greatest chance of winning, and those of other undertakings, referred to as “cover bids”. These bids are intended to be dismissed by the contractor either because they are financially less advantageous than those of the pre-designated undertaking, or because they do not meet the conditions set out in the call for tenders. The submission of a cover bid is explained by the payback that the undertaking will or hopes to be able to obtain for subsequent contracts, which may take the form of cover bids in its favor.
The courts make a distinction between cover bids and bids “in principle” (so-called “calling card” bids). A bid in principle is an unrealistic bid, drafted in such a way that the undertaking cannot win the contract. It does not necessarily imply an exchange of information or a prior agreement between the undertaking in question and the other tenderers. The submission of such bids is justified when the undertaking not intending to be selected, in particular because of its workload, is concerned that an outright abstention might lead the public entity awarding the contract to judge it as no longer interested in the type of work proposed and therefore not to consult it in the future. Such bids are not in themselves anticompetitive but become so if the undertaking in question notifies the other bidders of it.
