In 2023, the CMA fined 10 construction firms £60 million for colluding to rig the bidding processes for demolition and asbestos removal contracts worth £150 million. The evidence in the case included emails, text messages and handwritten notes - even a notebook with names of contractors next to compensation figures which firms owed one another for rigging bids in their favour.
This was a case of brazen illegality, targeting sites which included the Met Police training college and Oxford University. But the case also illustrates a wider point: too often, the real victims of bid rigging are taxpayers, who could be paying up to 20% or more (according to the Organisation for Economic Co-operation and Development, OECD) for vital public services, infrastructure and national security. Desperately needed money, which goes directly from stretched departmental budgets into the pockets of colluding firms.
Public procurement spend in the UK is in the region of £400 billion per year. No precise estimate of the impact of bid rigging is possible – the activity, after all, happens in secret and evidence suggests detected cases could be the tip of the iceberg. But the CMA believes the cost to the taxpayer might be between £1 billion and £3.5 billion.
The reality is that features like the nature and frequency of tenders (amongst others) make public sector procurement a prime target for bid rigging. In fact, over half all the bid rigging cases the CMA has investigated have involved public sector tenders. Figures from international authorities show the UK is by no means an outlier.
Nor is the cost purely financial. Evidence also points to reduced quality and innovation, sometimes with very real human consequences - from increases in road traffic accidents due to substandard infrastructure, to increased hospital mortality due to depleted budgets for essential medicines.
Historically, detection has been challenging – with such high rewards, and serious consequences if caught, colluding firms have strong incentives to hide their activity. Whistleblowing plays an important role, but caches of incriminating text messages and emails don’t just fall into the laps of competition authorities every day.
The good news is that a step change in detection is now possible, driven by advanced data science and AI. Around the world, governments and competition authorities (Spain, Portugal, Brazil, Korea, to name a few), are using data screening tools to hunt for suspicious patterns at scale. It is working. But it relies on one critical factor: access to the right data, at scale - including, crucially, losing tender bids.
The CMA has invested substantially in this area over recent years, combining deep cartel enforcement expertise with advanced data science. The product of that investment is BRIT - our Bid Rigging Intelligence Tool, which offers cutting edge capabilities to analyse data at scale across the public sector to find suspicious patterns.
BRIT can’t reach its true potential until it has access to the data needed for systematic screening at scale. Unlike in many countries, this data is not routinely collected or available in machine readable format here. We are running pilots with public bodies, including the Departments for Education, Work and Pensions and Justice. These pilots are already generating promising leads. Thus far, however, there has not been a cross-government commitment to create an accessible, large scale data set - in contrast to the experience in many other jurisdictions internationally.
Today, I am in Parliament presenting CMA recommendations to reform public procurement, of which our proposals on bid rigging form a key part. Most importantly, we are calling on government to unlock bid rigging capability at scale through a more coordinated approach to data. This would bring the UK in line with international counterparts and potentially save billions of pounds of taxpayer’s money.
seen at 14:49, 8 September in Competition and Markets Authority.