COLLUSION OR COINCIDENCE? THE FINE LINE BETWEEN ‘MERE’ INFORMATION EXCHANGE AND BID RIGGING
- The Competition and Commercial Law Review
- Jul 3
- 6 min read
Updated: Jul 6
[Shrushti Taori and Tatva Damania are IV year and III year law at Student at Maharashtra National Law University, Nagpur and Maharashtra National Law University, Mumbai, respectively]
Introduction
In the highly competitive environment of public and private procurement, the distinction between legitimate business strategy and anti-competitive collusion is often difficult to delineate. Collusion, under the Competition Act, 2002 (Act), refers to any agreement that has the effect or object of preventing, restricting, or distorting competition. As per Section 2(b) of the Act, an “agreement” encompasses any arrangement, understanding, or action in concert, whether formal or informal, written or unwritten, and irrespective of its enforceability by legal proceedings.
One of the most glaring forms of such anti-competitive behaviour is bid rigging, explicitly defined under Section 3(3)(d) of the Act. Bid rigging refers to a collusive arrangement among bidders, prior to the submission of bids, wherein they coordinate to manipulate the bidding process, either by agreeing on bid prices, designating a predetermined winner, or apportioning market share, with the intention of subverting fair competition.
These collusive arrangements often materialize before the bidding process formally begins. Participating firms may decide in advance on bid prices, quantities, or the rotation of winning bids, often with an implicit or explicit understanding that the resulting profits will be shared. Such conduct undermines the integrity of the bidding process, eliminates genuine competition, and inflates costs to the detriment of consumers and public institutions.
However, the scope of what constitutes bid rigging should not be narrowly confined to explicit agreements. In an oligopolistic market structure, characterized by a small number of interdependent firms, even seemingly innocuous pre-bid interactions may have anti-competitive implications. The mere exchange of information, passive listening, or the incidental receipt of competitors’ bid quantities, regardless of the truthfulness or source of such information, can distort the competitive landscape. These actions, though not formalized or mutually agreed upon, may still indicate a coordinated reduction in competitive uncertainty, which the Act seeks to prevent.
This article argues that any form of involvement in pre-bid discussions, regardless of whether a formal agreement, understanding, or action in concert is established, can potentially amount to bid rigging under the Act. The mere act of receiving or disseminating bid-related information, whether strategic misinformation, leaked data, or even information acquired through corporate espionage, can result in anti-competitive outcomes. In such cases, the presumption of concerted practice may arise, shifting the burden of proof to the parties involved.
Bid-quantity is a commercially sensitive information
Bid quantity is one of the most strategic (p.316) and commercially sensitive information (¶ 86). Disclosure of such information, irrespective of being incorrect or misleading (¶ 387), reduces strategic uncertainty in the market. It does not entail (¶ 91) that market competition would not be influenced.[1] Disclosing information like bid quantities (¶ 181), discloses the future strategy of the company. Such information is capable (¶ 41) of influencing the otherwise conduct of other undertakings in the market, by enabling the other undertakings to predict the competitor’s future behaviour (¶416) in the market,[2] and reducing (¶51) their decision-making independence.
Disclosure of bid-quantity forms ‘Agreement’
Disclosure of such commercially sensitive information forms ‘agreement’ as defined u/s 2(b) of the Act. The inclusive definition of ‘agreement’ includes ‘arrangement’, ‘understanding’, or ‘concerted practices’. When the parties have communicated with one another about their future conduct such as bid-quantity or bid-pricing, each party intentionally arouses in another the expectation that he will act in a certain way, and it amounts to arrangement, whereas when the party represents its future conduct with the intention that such conduct on his part would induce the other one to act in a particular way, such representation amounts to ‘understanding’.
Furthermore, in the case of a concerted practice, the communication from the first party is not an invitation, but merely a communication of information. If the receipt of such information influences or is likely to influence the receiver’s market conduct, Jan Blockx in his Mens Rea in EU Antitrust Law (Kluwer Law International, 2020, p. 85) explains that this amounts to a concerted practice. Along similar lines, the exchange of price – sensitive information between competitors constitutes a concerted practice (¶ 100), if it reduces uncertainty in the market, which acts as a facilitator to the collusion.
One may argue that there is an absence of a ‘meeting of minds’, a sine qua non (¶ 4), to form an agreement, and mere similarity in the conduct of the parties, without any meeting of minds, does not amount to an agreement (¶ 32) or held to be a violation of § 3. Alison Jones and Brenda Sufrin in EC Competition Law, Text, Cases, and Materials (Oxford University Press, 2004, p. 69) argues that the concept of an agreement centers around the existence of a ‘concurrence of wills’ between at least two parties.
However, such arguments overlook the broad and inclusive nature of the term ‘agreement’ under Section 2(b) of the Act. The statutory definition does not require a formal contract or explicit concurrence of wills; instead, it extends to any form of arrangement, understanding, or concerted practice, even if it is informal or not legally enforceable. In light of the act’s objective, the essence of an anti-competitive agreement lies not in the explicitness of mutual consent but in the coordination of conduct that distorts the competitive process. Therefore, even in the absence of a clear “meeting of minds,” the exchange of commercially sensitive information, which influences or is likely to influence market behaviour, suffices to establish the existence of an agreement.
Hence, when a bid-quantity is exchanged, or even listened, in a pre-bidding discussion, it creates an environment of shared expectations and understanding between the parties. This exchange of information can lead to a reduction in uncertainty, facilitating coordination in subsequent bidding behaviour. If such exchanges result in the parties aligning their actions—whether through explicit arrangements or implicit understanding—it amounts to collusion. This communication can influence each participant’s behaviour in a way that restricts competition, and thus amounting to an ‘agreement’ under the act.
Implementation is not a sine qua non for the existence of such ‘agreement’
Implementation of the bid quantities, as disclosed in the pre-bidding discussions, is not sine qua non (¶ 23) for the existence of such agreement,[3] and such an agreement still exists, even if the competition is not distorted (¶ 46). In fact, the EU Courts have held that misleading or incorrect nature of information shared is still capable of affecting the conduct of the undertakings (¶ 91).
When participants join a meeting with the knowledge of the aim or nature of the meeting, and yet do not actually proceed to implement the discussions (¶ 509) of the meeting, such non-implementation does not affect the existence of the agreement (¶ 64). If merely parties have not implemented the discussions does not mean that there is no effect (¶ 175). This is because such information sharing at least creates a visual and psychological effect (¶ 7, 8). even if the competitors do not follow the shared future course (¶ 135). It has been observed that the fact that the exchange of information was incorrect does not mean that the conduct of the competitors was not influenced (¶ 96).
Hence, even if the bidders disclose incorrect information or information that is not ultimately implemented, whether or not to manipulate the decisions of other bidders, such disclosure does not negate the existence of an anti-competitive agreement.
Non-implementation of the discussed quantities does not affect the likely AAEC
§ 3 of the act employs the phrase “….likely to cause AAEC”, and from the bare perusal of the provision, it is clear that it does not require any specific intent to constitute a violation. The mere fact that the agreement is likely to cause AAEC i.e., has the potential to cause an adverse effect on the competition, is sufficient to establish contravention of the provision. For example, when the twenty paper mills met to discuss the rise of prices in non-wood paper segment, it was held that when competitors meet and discuss prices, at the minimum, it is likely that such conduct will cause AAEC and the act prohibits not only the agreement that restricts competition but also the ones which are likely to cause AAEC (¶ 204), irrespective of it not being implemented.
Further, in ABC Bearing Limited, five companies were alleged to be involved in the cartelisation of the automobile bearing market. The cartel formed was within the purview of § 3(3), and hence presumed to have caused AAEC. The OPs argued that the revised prices were different from the ones that were actually quoted. However, the commission held that such argument cannot rebut the presumption under § 3.
Similarly, the revised bidding quantities, or non-implementation of the quantities discussed during pre-bidding discussions, cannot be a ground of non-existence of the agreement formed during the information exchange. This is because even though the information exchanged is not implemented, the very ‘act’ of disclosure in public has the potential to cause AAEC, i.e., even if it has not caused any adverse effect yet, it has the potential to do so.
Thus, mere discussion of the bid quantities, even without implementation, has the potential to cause price fixing and bid rigging. This is presumed to cause AAEC under § 3(3) of the act. Hence, the exchange of information, even if incorrect or misleading, reduces market uncertainty and creates an environment conducive to collusion. Such conduct is presumed to have AAEC, as evidenced by its potential to influence competitors’ behaviour and restrict competition. Thus, the law rightly addresses the fine line between legitimate business strategy and collusion, ensuring the integrity of competitive markets.

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