Law and Economics Approaches to Bid Rigging
New Horizons in Competition Law and Economics series
Among the most formidable objectives of the European Union (EU) is the creation of the internal market. Dismantling obstacles to internal trade between the Member States is achieved via the four freedoms and competition law. In 2006 the European public procurement market had an estimated size of €1,900 billion. Public procurement constitutes for a significant part of the Member States’ GDP. The EU overhauled its public procurement rules in 2004 and, despite its efforts to create a competitive internal market, Member States’ buying remains largely national. The national bias of public procurement may be indicative of weak foreign competition and/or weak foreign participation in national tenders. In either case the possibility increases that national competitors could create and operate a bid rigging cartel. The absence of sufficient competition from other Member States therefore requires that particular attention is placed on the detection of cartels and optimal punishment.
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