1. New York State Attorney General’s Office Antitrust Bureau
NYS Attorney General’s Office Antitrust Bureau May 21-22, State Purchasing Forum BID-RIGGING
New York State Attorney General’s Office
Antitrust Bureau

2. The Value of Competition
Lower prices
Improved quality
More choices for buyers

3. The Antitrust Laws
Federal Law – Section 1 of the Sherman Act, 15 U.S.C. § 1, “Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States or with foreign nations, is hereby declared to be illegal.
State Law – NY General Business Law § 340 (1), “Every contract, agreement, arrangement or combination whereby: Competition or the free exercise of any activity in the conduct of any business, trade or commerce or in the furnishing of any service in this state is or may be restrained…is hereby declared to be against public policy, illegal and void.”

4. Horizontal Restraints of Trade
Agreements among competitors to restrain competition.
Price-fixing among competitors and bid rigging are examples of horizontal restraints of trade.
Per se illegal - illegal on its face, without inquiry into motives, justifications or reasonableness.

5. What is Bid-Rigging? Price-fixing – pure and simple.
Any agreement between potential and actual bidders that affects, limits or avoids competition.

6. Forms of Bid Rigging Bid suppression
Complementary bidding – also known
as “cover” or “courtesy” bidding
Market division or allocation
agreements

11. Ex-Marsh Officials Guilty of Bid-Rigging

12. School Consultant Gets 7½ Years For Bid-Rigging

13. Steps to Prevent Bid-Rigging
1. Insist on compliance with bidding procedures
2. Expand your list of bidders
3. Know your bidders

14. Steps to Prevent Bid-Rigging
4. Prepare clear specifications
a) Do not tailor specifications to one particular product or supplier.
b) Do not use specifications copied from a manufacturer’s literature.
c) Do not use brand names in specifications unless it’s for descriptive purposes and you add “or equivalent.”

15. Steps to Prevent Bid-Rigging
5. Increase Bidder Uncertainty
a) Do not publish detailed contract or project
estimates. Consider:
Not publishing a vendor list before letting
Eliminating pre-bid conferences
b) Move to an electronic bidding process.

16. Steps to Prevent Bid-Rigging
6. Be Proactive
a) Collect and maintain a comprehensive set of bid data, and utilize a structured bid analysis methodology.
b) Perform, repeat, and update your bid analysis studies periodically.
c) Evaluate changing your practices to encourage more competition.

17. Detecting Bid-Rigging
RED FLAGS
Qualified bidders fail to bid.
A particular contractor always, or frequently, wins in a specific geographic market.
Joint venture bids are submitted when participants could have bid on their own.
Losing bidders or non-bidders get subcontract work from the winning bidder.

18. Detecting Bid-Rigging
RED FLAGS (continued)
Specific contractors always bid against each other, never bid against each other, or always bid for specific customers.
Various irregularities in the bidding process.
Conduct represents an unexplained deviation from traditional business patterns.

19. Detecting Bid-Rigging
RED FLAGS (continued)
Parallel conduct by competitors. Plus factors:
- opportunity for collusion
- similarity of language, terms and conditions
- no economic justification for conduct
- raising prices during a time of surplus or overcapacity

20. Market Characteristics and Collusive Activity
Concentrated Market
Homogeneous product or service
Demand is relatively insensitive to price

21. Conclusion
Communicate with other procurement officials around the State.
Report suspicious conduct to the Attorney General’s Antitrust Bureau.

22. Questions? Contact: Jay L. Himes, Bureau Chief James Yoon, AAG
New York State Attorney General’s Office
Antitrust Bureau
120 Broadway, Suite 26C
New York, NY
(212)
(212) (fax)