Abstract
In this article, two case studies of large-scale bid rigging in the construction industry in Canada and the Netherlands are analysed to explore why business cartels sometimes do and sometimes do not involve organised crime. By combining concepts from both organised crime and organisational crime, an integrated understanding of the organisation of serious crimes for gain is applied. Across time and space, businesses in the construction industry are known to fix prices, use collusive tendering and divide market shares in illegal cartel agreements. In order to stabilise cartels, participants need to ward off new competitors and prevent cheating within the cartel. The question why we see a system of collusion involving organised crime and violence in Canada as opposed to the Netherlands is answered through analysing two comparable cases. This article finds two systems of bid rigging emerge under different cultural conditions: inclusive and exclusive collusion. The exclusive system makes use of the violent reputation provided by criminal groups and distinguishes from the inclusive system that uses sophisticated administration of mutual claims in shadow bookkeeping.
Highlights
When firms in the same market control competition between them by fixing prices, sharing markets or rigging tendering procedures they engage in a business cartel (Harding and Joshua 2010)
Besides bid rigging by construction firms and involvement of organised crime, the Charbonneau investigations cover a great variety of misconduct, such as corruption and illegal financing of political parties
The often-separated criminological discourses of organised and organisational crime literature have both treated the phenomenon of economic cartels, respectively framing it as organised crime ‘infiltration’ and pure corporate conspiracy
Summary
When firms in the same market control competition between them by fixing prices, sharing markets or rigging tendering procedures they engage in a business cartel (Harding and Joshua 2010). Firms involved in business cartels need to conceal their illegal conduct from customers, non-participants and internal and external watchdogs (Baker and Faulkner 1993). Trends in Organized Crime (2019) 22:414–432 watchdogs in the dark, participants have to ensure that other firms in the cartel comply with the illegal agreements. Cartelists monitor prices, customers, and tendering procedures and negotiate compensations to ensure compliance with cartel agreements (Faulkner et al 2003). In addition to communication and negotiation (Jaspers 2017), some cartels use – the threat of – price wars or exclusion from the market to deter or sanction cheaters within the cartel (Ayres 1987; Connor 2010; Levenstein and Suslow 2006; Bhaskarabhatla et al 2016). Potential instability within cartels is prevented using the protection of organised criminal groups and the (threat of) violence (Varese 2014)
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