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Be wary of bid rigging, even when it’s done accidentally

On Behalf of | Mar 3, 2017 | Construction Law

You work in construction, so you know that bidding on jobs is just how the industry works much of the time. You also know that bid rigging — the act of colluding with others who are technically competitors — is illegal. You would never do it intentionally.

However, it’s important to understand just how serious this is. Even if it’s done unintentionally, you could still violate the Sherman Act, which was set up in 1890 to prevent this type of collusion.

For instance, maybe you and one other contractor are bidding on a job. It’s a small community and you know each other well. One day, you wind up grabbing lunch at the same restaurant, and you’re talking about your jobs. The other contractor mentions that he’s actually too busy to take the job, but he just put in a high bid in case they want to overpay. Then he’ll shuffle some things around. In reality, though, he has no plans to take the job and tells you that you’ll get it, laughingly telling you how much he put in for the high bid.

You then look at your bid and realize you’re going to win with ease. You could even increase your bid by $50,000 and still get the job. If you’re doing the same work, why not make the extra $50,000?

Suddenly, you’ve violated the Sherman Act. That’s a felony, potentially carrying a jail term and millions of dollars in fines. This scenario may not be very common, but it can happen in tight-knit communities where people talk and look out for each other, helping to spread work around. Make sure you understand exactly how contracts and jobs are handed out and what legal rights and obligations you have.

Source: Department of Justice, “Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to Look For,” accessed March 03, 2017