A Case Study on Bid Rigging in Centralized Procurement of Audit Consulting Services in Italy

Abstract

Public procurement is plagued by bidding rings almost everywhere. While the reasons as to why cartels are active in public procurement markets are well understood, little evidence is available about the subtleties of the anticompetitive mechanisms adopted by cartels members to game procurement procedures. This paper borrows from an in-depth (and successful) investigation carried out in 2016 by the Italian Competition Authority (Autorita Garante della Concorrenza e del Mercato - AGCM) on a nation-wide (multi-lot) framework agreement for consulting services. The AGCM’s findings are noteworthy since the “conjectured logic” of the cartel’s behavior (endogenous evidence) did coincide with those pieces of evidence seized by police forces for criminal crimes at the cartel members’ premises (exogeneous evidence). As the investigation was triggered by a confidential report sent by the awarding authority (Consip, the Italian national central purchasing body), the paper also emphasizes the importance of informal as well as formal co-operation between awarding authorities, especially central purchasing bodies, and competition authorities.