Skip to main content Accessibility help
  • Cited by 13
  • Print publication year: 2006
  • Online publication date: November 2009

15 - Bidding rings and the design of anti-collusive measures for auctions and procurements



Since the mid-1990s, the enforcement of competition laws against cartels has drawn considerable attention to the means by which buyers or sellers establish and manage collusive schemes. High-profile lawsuits against cartels in the food additives and vitamins sectors have made public an unprecedented wealth of information about how cartels operate. Complementing this stream of data is a modern body of scholarship that, working extensively with reported judicial decisions and other materials, has provided informative perspectives on the methods of cartel coordination.

For the most part, discussions inspired by modern enforcement developments and scholarly contributions have addressed the optimal design of public policies against cartels. Key focal points for debate have included the formulation of strategies for improving the detection of cartels (e.g., providing inducements for cartel members or employees of cartel members to inform public authorities about the existence of the cartel); the establishment or enhancement of private rights of action to supplement anti-cartel enforcement by public agencies; and the choice of remedies (e.g., civil damages and criminal punishment, including imprisonment for individuals).

In this chapter, we explore the implications of the modern data and literature on cartel coordination with a different orientation. Rather than assess refinements in public enforcement policy, we analyze possibilities for precautions that contracting parties can take independently, without necessarily invoking public laws that condemn cartels, to defeat or discourage collusion by bidders.

American Bar Association, Section of Antitrust Law (2002). Antitrust Law Developments (5th Ed.).
Anderson, , Mark, R. (Fall 2001). Settle or Roll the Dice?, Litigation, 28 (1), 37–41.
Anton, James and Yao, Dennis (1992), Coordination in Split Award Auctions, Quarterly Journal of Economics, 57, 681–707.
Aubert, Cecile, Patrick Rey and William E. Kovacic (2005). The Effect of Leniency and Whistleblowing Programs on Cartels, International Journal of Industrial Organization (forthcoming).
Ausubel, Lawrence M., Peter Cramton and Paul Milgrom (2004). The Clock-Proxy Auction: A Practical Combinatorial Auction Design, forthcoming in Peter, Cramton, Yoav, Shoham, and Richard, Steinberg (Eds.), Combinatorial Auctions, MIT Press, 2006.
Baker, , Donald, I. (2001). The Use of Criminal Law Remedies to Deter and Punish Cartels and Bid-Rigging, George Washington Law Review, 69, 663–720.
Baker, , Jonathan, B. (2002). Mavericks, Mergers, and Exclusion: Proving Coordinated Effects Under the Antitrust Laws, New York University Law Review, 77, 135–203.
Bernheim, Douglas (2002). Expert Report of B. Douglas Bernheim, M.D.L. No. 1285, in Re: Vitamins Antitrust Litigation, Misc. No. 99–0197 (TFH), 24 May 2002.
Breit, William and Kenneth, G. Elzinga (1986). Antitrust Penalty Reform – An Economic Analysis, Washington and London: American Enterprise Institute.
Calkins, Stephen (1997a). Corporate Compliance and the Antitrust Agencies’ Bi-Modal Penalties, Law & Contemporary Problems, 60 (3), 127–167.
Calkins, Stephen (1997b). An Enforcement Official's Reflections on Antitrust Class Actions, Arizona Law Review, 39, 412.
Chen, Joe and Joseph E. Harrington, Jr. (2005). The Impact of the Corporate Leniency Program on Cartel Formation and the Cartel Price Path, in Vivek, Ghosal and Johan, Sennek, (Eds.), Political Economy of Antitrust forthcoming, North-Holland.
Coase, R. H. (1937), The Nature of the Firm, >Economica, 4, 386–405.
Connor, John M. (2005). Price-Fixing Overcharges: Legal and Economic Evidence, Working Paper #04–05 American Antitrust Institute.
Connor, , John, M. (2001). Global Price Fixing: Our Customers Are the Enemy. Series: Studies in Industrial Organization, vol. 24, Boston: Kluwer Academic Publishers.
Cooter, Robert (1985). Unity in Tort, Contract, and Property: The Model of Precaution, California Law Review, 73, 1–51.
Eichenwald, Kurt (2000). The Informant: A True Story, New York: Broadway Books.
Evenett, Simon J., Margaret C. Levenstein and Valerie Y. Suslow (2002). International Cartel Enforcement: Lessons from the 1990s, OECD Global Forum on Competition.
European Commission (2003). The Commission of the European Communities Decision of 21 November 2001, Case COMP/E-1/37.512-Vitamins, Official Journal of the European Communities, 1 October 2003.
First, Harry (2001). The Vitamins Case: Cartel Prosecution and the Coming of International Competition Law, Antitrust Law Journal, 68, 711–734.
Fuller, , John, G. (1962). The Gentleman Conspirators: The Story of the Price-Fixers in the Electrical Industry, New York: Grove Press.
Gavil, , Andrew, I., William, E. Kovacic and Jonathan, B. Baker (2002). Antitrust Law in Perspective: Cases, Concepts and Problems in Competition Policy, St. Paul: West Group.
Genesove, David and Wallace, P. Mullin (2001). Rules, Communication and Collusion: Narrative Evidence from the Suger Institute Case, American Economic Review, 91, 379–98.
Global Competition Review (2004), Cartel Regulation,
Graham, , Daniel, A. and Robert, C. Marshall (1987). Collusive Bidder Behavior at Single-Object Second Price and English Auctions, Journal of Political Economy, 95, 1217–1239.
Grossman, , Peter, Z. (Ed.) (2004). How Cartels Endure and How They Fail: Studies of Industrial Collusion, Northhampton, MA: Edward Elgar.
Guersant, Olivier (2002). European Commission Adopted Ten Decisions Imposing Heavy Fines on Hard Core Cartels in 2001, Directorate for Competition, European Commission.
Haberbush, , Kara, L. (2000). Limiting the Government's Exposure to Bid Rigging Schemes: A Critical Look at the Sealed Bidding Regime, Public Contract Law Journal, 30, 97–122.
Hendricks, Kenneth and Robert, H. Porter (1988). An Empirical Study of an Auction with Asymmetric Information, American Economic Review, 78, 865–883.
Herling, John (1962). The Great Price Conspiracy: The Story of the Antitrust Violations in the Electrical Industry, Washington: R. B. Luce.
Hirshleifer, Jack and John, G. Riley (1993). The Analytics of Uncertainty and Information, Cambridge: Cambridge University Press.
International Competition Policy Advisory Committee (ICPAC) to the Assistant Attorney General for Antitrust (2000), Final Report, US Department of Justice.
Klemperer, Paul (Winter 2002). What Really Matters in Auction Design, Journal of Economic Perspectives 16, 169–189.
Kolasky, William J. (2002). Antitrust Compliance Programs: The Government Perspective, Antitrust Division, US Department of Justice. Available at
Kovacic, , William, E. and Carl, Shapiro (2000). Antitrust Policy: A Century of Economic and Legal Thinking, Journal of Economic Perspectives, 14, 43–61.
Kovacic, , William, E. (2001). Private Monitoring and Antitrust Enforcement: Paying Informants to Reveal Cartels, George Washington Law Review, 69, 766–797.
Kovacic, , William, E. (2003). The Modern Evolution of US Competition Policy Enforcement Norms, Antitrust Law Journal, 71, 377–478.
Lopomo, Guiseppe, Robert, C. Marshall and Leslie, M. Marx (2005). Inefficiency of Collusion at English Auctions, Contributions to Theoretical Economics 5 (1), Article 4.
Mailath, George, and Peter, Zemsky (1991). Collusion in Second Price Auctions with Heterogeneous Bidders, Games and Economic behavior, 3, 467–486.
Marshall, , Robert, C. and Leslie, M. Marx (2006). Bidder Collusion, forthcoming in Journal of Economic Theory.
Marshall, Robert C., Leslie M. Marx and Matthew E. Raiff (2005), Cartel Price Announcements: The Vitamins Industry, Working paper, Duke University.
Marshall, , Robert, C. and Michael, J. Meurer (2004). Bidder Collusion and Antitrust Law: Refining the Analysis of Price Fixing to Account for the Special Features of Auction Markets, Antitrust Law Journal, 72, 83–118.
McAfee, R. Preston and McMillan, John (1992), Bidding Rings, American Economic Review, 82, 579–599.
Motta, Massimo, and Michele, Polo (2003). Leniency Programs and Cartel Prosecution, International Journal of Industrial Organization, 21, 347–379.
Myerson, , Roger, B. (1981). Optimal Auction Design, Mathematics of Operations Research, 6, 58–73.
Organization for Economic Cooperation and Development (OECD) (2005). Cartels: Sanctions Against Individuals. Available at
Riley, , John, G. and William, F. Samuelson (1981). Optimal Auctions, American Economic Review, 71, 381–392.
Robinson, , Marc, S. (1985). Collusion and the Choice of Auction, RAND Journal of Economics, 16, 141–145.
Scott, Sheridan (2004). Cartel Enforcement: International and Canadian Developments, in Hawk, B., (Ed.), International Antitrust Law and Policy, Fordham Corporate Law Institute (2005), 33–56.
Spagnolo, Giancarlo (2005). Leniency and Whistleblowers in Antitrust, forthcoming in Buccirossi, P., (Ed.), Handbook of Antitrust Economics,MIT Press.
Spratling, , Gary, R. (2001). Detection and Deterrence: Rewarding Informants for Reporting Violations, George Washington Law Review, 69, 798–823.
Stigler, , George, J. (1964). A Theory of Oligopoly, Journal of Political Economy, 72, 44–61.
Vann, David E., Jr. and Ethan E. Litwan (2004). Recent Developments in International Cartel Enforcement, in Getting the Deal Through: Cartel Regulation (Global Competition Review).
Williamson, Oliver E. (1975), Markets and Hierarchies: Analysis and Antitrust Implications. New York: The Free Press, 1975.
Wils, , Wouter, P. J. (2005). Is Criminalization of EU Competition Law the Answer?, World Competition, 28 (2), 117–159
Wils, , Wouter, P. J. (2003). Should Private Antitrust Enforcement Be Encouraged in Europe?, World Competition, 26, 473–488.