Cartels, Competition and Public Procurement
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Cartels, Competition and Public Procurement

Law and Economics Approaches to Bid Rigging

  • New Horizons in Competition Law and Economics series

Stefan E. Weishaar

Stefan Weishaar explores the ways in which economic theory can be used to mitigate the adverse effects of bid rigging cartels. The study sheds light on one of the vital issues for achieving cost-effective public procurement – which is itself a critical question in the context of the global financial crisis. The book comprehensively examines whether different laws deal effectively with bid rigging and the ways in which economic theory can be used to mitigate the adverse effects of such cartels. The employed industrial economics and auction theory highlights shortcomings of the law in all three jurisdictions – the European Union, China and Japan – and seeks to raise the awareness of policymakers as to when extra precautionary measures against bid rigging conspiracies should be taken.
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Europe

Stefan E. Weishaar

Extract

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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