# What is Tender Collusion (Bid Rigging) and is it Prohibited?

Yes, **Tender Collusion** (Bid Rigging) is considered one of the most serious practices prohibited under the **Saudi Competition Law**. Article Five specifically prohibits "collusion or coordination in bids or offers in government auctions and tenders or others."

## What does Tender Collusion mean?

Collusion occurs when competitors agree secretly among themselves instead of competing fairly to win a project. This agreement usually aims to raise prices or lower the quality of goods and services for the buyer (government or private entity).

## Common Forms of Collusion

Prohibited coordination can take several forms, including:

- **Cover Bidding:** Competitors submitting sham offers (at a very high price or with unacceptable conditions) to ensure a specific pre-agreed entity wins.
- **Bid Suppression:** Agreement by some competitors to refrain from submitting bids or to withdraw their bids to enable a specific competitor to win.
- **Bid Rotation:** Agreement by competitors to take turns winning tenders periodically.
- **Market Allocation:** Agreement not to compete for contracts involving specific customers or specific geographic areas.

## Why does the Law prohibit this practice?

The prohibition aims to:

- Ensure government entities and companies get the **best price and best quality**.
- Protect **public funds** from waste resulting from artificial prices.
- Provide a **fair opportunity** for all establishments to compete and grow.

## Are "Joint Bids" (Consortiums) considered collusion?

No, the Implementing Regulations clearly stated that **submitting joint bids is not considered collusion**, but under two essential conditions:

- That the parties **disclose** it from the beginning.
- That the **nature of the project requires it**.
- That its purpose or effect is not to violate competition.

This exception allows establishments to cooperate legitimately to submit stronger offers for large and complex projects.

**Reference:** Competition Law (Article 5) and its Implementing Regulations (Article 8) - **General Authority for Competition**