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In business terms, what does the phrase "bid rigging" mean?
I'm reading a book in which the phrase was used to describe the Japanese word "dango," but I'm still clueless. Here's the paragraph in which it was used: "Examples of Japanese style wa abound. More candid government and company executives readily admit that dango or 'bid rigging,' is common in Japan, but to them it is just wa at work. Until foreigners began complaining about the practice, it was not considered an ethical issue. The Japanese involved were perplexed and irritated that foreigners made an issue out of it, but a few isolated complaints from outsiders are not enough to eliminate a culturally entrenched kata that serves the Japanese establishment so well." Can anyone clue me in on what he's referring to?
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- Im not a businessperson or a lawyer, but my understanding of bid rigging is that one bidder is told before submitting his bid, what his bid needs to be to get the contract.
- Bid rigging From Wikipedia, the free encyclopedia Jump to: navigation, search Bid-rigging is an illegal agreement between two or more competitors. It is a form of collusion, which is illegal in the United States. It is a form of price fixing and market allocation, and involves an agreement in which one party of a group of bidders will be designated to win the bid. It is often practised where contracts are determined by bid, for example with government construction contracts. There are some very common bid-rigging practices: Subcontract bid-rigging occurs where some of the conspirators agree not to submit bids, or to submit cover bids that are intended not to be successful, on the condition that some parts of the successful bidder's contract will be subcontracted to them. In this way, they "share the spoils" among themselves. Bid suppression occurs where some of the conspirators agree not to submit a bid so that another conspirator can successfully win the contract. Complementary bidding, also known as cover bidding or courtesy bidding, occurs where some of the bidders bid an amount knowing that it is too high or contains conditions that they know to be unacceptable to the agency calling for the bids. Bid rotation occurs where the bidders take turns being the designated successful bidder, for example, each conspirator is designated to be the successful bidder on certain contracts, while his or her co-conspirators are designated to win other contracts. This is a form of market allocation, where the conspirators allocate or apportion markets, products, customers or geographic territories among themselves, so that each will get a "fair share" of the total business, without having to truly compete with the others for that business. These forms of bid-rigging are not mutually exclusive of one another, and two or more of these practices could occur at the same time. For example, if one member of the bidding ring is designated to win a particular contract, his or her co-conspirators could avoid winning either by not bidding ("bid suppression"), or by submitting a high bid ("cover bidding"). Bid-rigging is a form of fraud, and almost always results in economic harm to the agency which is seeking the bids, and to the public, who ultimately bear the costs as taxpayers or consumers. In the United States, bid-rigging is a criminal offence under section 1 of the Sherman Act. In Canada, it is a criminal offence under section 47 of the Competition Act. In the UK, individuals can be prosecuted criminally under the Enterprise Act. In Japan it is a violation of both the Anti-Monopoly Law as well as Public Law, but is rampant nationwide in construction and engineering works.
