REGULATING JOINT BIDDING IN PUBLIC PROCUREMENT

Abstract

Joint bidding is the practice of two or more independent suppliers submitting a single bid, a practice widespread in private and public procurement. This practice may generate efficiencies through synergies and information sharing, but may also be abused to reduce the number of competitors or - even worse - to facilitate/enforce collusion among them. Hence it must be regulated. In this paper we first present results form a survey on the regulation of joint bidding in European public procurement, documenting how the very existence and the type of regulation differ across countries, and that - where present - regulation is often related to the ability of an individual firm to be admitted as a solo bidder. Borrowing from the theories of joint bidding in auctions and of horizontal mergers and joint ventures in oligopoly, we then review the basic economics of bidding consortia and the effects that these can have in terms of bidding competition, coordination among firms, risk management, exploitation of other synergies and entry. In the final part of the paper we compare several practical criteria that could be adopted for regulating bidding consortia in public procurement in a consistent way by assessing their relative degrees of restrictiveness. The only strong conclusion we can draw is that there is an urgent need for further theoretical and empirical/experimental research on this very important issue for public procurement.