Procurement depends on genuine competition because buyers can only
assess value when suppliers make independent commercial decisions. A tender may
appear competitive because several bids arrive, yet the process is undermined
if prices, territories, customers, or bidding strategies have been coordinated
in advance. Genuine competition creates uncertainty for suppliers, forcing each
to decide independently how hard to compete, and gives buyers confidence that
the offers received reflect real market rivalry.
Value for money depends on more than the lowest initial price.
Competitive pressure shapes quality, service, innovation, contractual terms and
long-term supplier performance, because bidders must distinguish themselves
from rivals. Where competition is weak or artificial, buyers pay more while
receiving less. With gross UK public sector procurement spending reaching £434
billion in 2024/25, even a modest erosion of competitive pressure carries a
significant cost to taxpayers.
Functioning markets also depend upon suppliers believing that
opportunities are won through fair competition rather than arrangements between
rivals. New entrants invest when they can challenge incumbents on merit, while
established businesses must keep improving to retain customers. Where
competitors divide markets or manipulate tenders, efficient suppliers can be
excluded, and buyers lose access to the innovation, capacity and commercial
tension that genuine rivalry is meant to deliver.
Procurement professionals therefore occupy an important position in
protecting competitive markets. They observe pricing patterns, bidder
participation, withdrawals, subcontracting arrangements and supplier behaviour
across repeated competitions, sometimes spotting warning signs before
regulators become involved. Their role is not to assume that unusual conduct
proves wrongdoing, but to recognise when commercial patterns justify
examination. Competition-law awareness sharpens procurement judgement, helping distinguish
vigorous rivalry, legitimate cooperation and unlawful coordination.
Genuine competition should therefore be treated as a condition to be
protected, not an outcome to be assumed. Receiving multiple tenders does not,
by itself, establish that suppliers competed independently, just as cooperation
between businesses does not automatically establish collusion. Effective
procurement requires market knowledge, careful tender design and vigilance
throughout the commercial process. Where rivalry remains real, buyers,
suppliers and the wider economy all benefit.
When Competition Becomes Collusion
Competition works when suppliers independently decide how strongly to
compete, what prices to charge and what terms to offer. Rivalry pushes
businesses to improve value, service and innovation, because each risks losing
work to a better competitor. The position changes once suppliers shift from
independent decision-making to coordination. Once competitors agree how they
will behave towards customers, rivalry can become collusion, weakening the
competitive process that procurement is designed to protect.
Collusion ranges from explicit agreements on prices or customers to
informal understandings about who should win work. Competitors may remain
separate businesses, continuing to submit apparently independent tenders, yet
their decisions are no longer autonomous. The customer sees a market that looks
competitive, with the elements of genuine rivalry quietly removed. That
distinction between parallel commercial behaviour and coordinated conduct sits
at the heart of competition law enforcement.
The danger is acute in procurement, because tendering depends on buyers
receiving independent offers. In 2019 the CMA found that six office fit-out
firms – JLL, Fourfront, Loop, Coriolis, ThirdWay and Oakley – had engaged in
cover bidding across 14 contracts between 2006 and 2017, deliberately
submitting losing bids to create an impression of rivalry. Five firms were
fined over £7 million, Fourfront alone paying £4.14 million; JLL avoided a fine
by reporting the arrangement first.
Legitimate competition does not require hostility between suppliers.
Businesses may meet through trade associations, form lawful joint ventures, use
subcontractors or cooperate where genuine efficiencies justify it. The legal
concern arises when cooperation reduces uncertainty about how competitors will
behave, particularly over prices, customers, territories or bidding intentions.
Procurement professionals need to judge not merely whether suppliers interact,
but whether that interaction preserves independent judgement and genuine
competitive pressure.
Why Competition
Matters in Procurement
Competition enables procurement to test whether suppliers are offering
genuine value. When businesses compete independently, each has an incentive to
sharpen pricing, improve quality and demonstrate stronger delivery. Buyers gain
a clearer benchmark against which offers can be compared, rather than relying
on a single supplier’s assessment of what the market will bear. Effective
rivalry, therefore, supports value for money while limiting the scope for
excessive margins or complacency.
The scale of the risk is well documented. OECD guidance notes that bid
rigging can materially increase procurement costs, with some studies indicating
that eliminating it may reduce prices by 20% or more. Estimates of cartel
overcharges vary considerably by market, methodology and period, so no single
percentage range is definitive. In 2023, bid rigging accounted for close to 44%
of hard-core cartel infringement decisions reported by competition authorities
internationally.
Price is only one dimension of competition. Suppliers may differentiate
themselves through better specifications, faster response times, stronger
account management, improved warranties or more reliable performance. Where
evaluation criteria reward these factors appropriately, competitive pressure
encourages bidders to develop offers that meet the buyer’s wider objectives
rather than simply cutting cost. Procurement can consequently use competition
to improve service standards while preserving pressure on total expenditure.
Innovation is also strengthened when suppliers know that established
methods will not guarantee future work. New entrants can challenge incumbents
with new technologies, models or approaches, while existing providers must keep
improving to defend their positions. Competitive procurement can accelerate
adoption of digital systems, lower-carbon solutions and more efficient
processes. Where markets become closed or predictable, that incentive weakens,
potentially leaving buyers dependent on outdated solutions.
The prospect of future competition also influences supplier performance
after contract award. An incumbent facing credible retendering has a continuing
incentive to maintain service standards, control costs and protect its
reputation. Where competition weakens, dependency can increase, and buyers may
lose leverage in the face of underperformance. Tussell reported that the
government’s 39 Strategic Suppliers received around £24.7 billion in 2024/25,
representing roughly 10% of its £249 billion measure of public procurement
expenditure excluding capital spending. Genuinely contested retendering helps
preserve competitive pressure and limits over-reliance on a narrow supplier
base.
The UK
Competition Law Framework
The United Kingdom’s competition law framework exists to protect markets
from agreements and conduct that weaken rivalry. Its principal domestic
foundation is the Competition Act 1998, supported by the Enterprise Act 2002
and later legislation. Together, these measures regulate anti-competitive
behaviour, provide investigative and enforcement powers, and establish serious
consequences for businesses and individuals whose actions distort markets,
restrict customer choice or undermine fair commercial competition.
The Enterprise Act 2002 strengthened enforcement by creating a criminal
cartel offence for individuals involved in the most serious forms of collusion.
Price-fixing, market-sharing, bid-rigging, and agreements to restrict output
can expose participants to consequences that extend beyond corporate penalties.
The Act signalled that cartel behaviour is not treated merely as poor
commercial practice, but as conduct capable of attracting personal criminal
liability, including imprisonment for those most directly involved.
The Competition and Markets Authority is the UK’s principal enforcement
body. It can investigate suspected infringements, require documents and
information, conduct searches under statutory powers, impose financial
penalties and pursue director disqualification. Certain sector regulators,
including in energy, communications and financial services, hold concurrent
competition powers, so suspected anti-competitive conduct may attract scrutiny
from a specialist regulator as well as the CMA, depending on the market
concerned.
Enforcement is not confined to regulatory action. Businesses harmed by
anti-competitive conduct may pursue damages claims in court, while CMA
decisions can themselves be challenged before the Competition Appeal Tribunal.
The CMA’s leniency arrangements encourage cartel participants to disclose
wrongdoing and cooperate with investigations. Together, public enforcement,
criminal sanctions, private actions and director consequences form a framework
designed to punish infringements and deter coordination between competitors.
The Competition
Act 1998
The Competition Act 1998 provides the principal domestic framework for
protecting competition within UK markets. Its purpose is not to prevent
businesses from competing aggressively, but to ensure that rivalry remains
independent and fair. The Act targets conduct that distorts markets, including
anti-competitive agreements and abuses of dominant positions. For buyers, this
protection helps preserve meaningful choice; for suppliers, it establishes
boundaries within which legitimate commercial competition can take place.
The Act contains two central prohibitions. Chapter I addresses
agreements, decisions and concerted practices that prevent, restrict or distort
competition, while Chapter II concerns abuse by businesses holding dominant
market positions. These rules apply across a wide range of sectors and
commercial relationships, meaning that suppliers cannot assume competition law
matters only in major cartel investigations; routine pricing, distribution,
cooperation and tendering arrangements may also attract scrutiny.
For procurement, Chapter I is particularly significant because competing
suppliers are expected to determine their bids independently. Agreements over
prices, territories, customers, output or tender outcomes can remove the
uncertainty that competition requires. Even informal cooperation may create
legal risk where businesses coordinate behaviour rather than making autonomous
decisions. Buyers therefore depend upon the Act to help ensure that multiple
tenders represent genuine rivalry rather than an orchestrated appearance of
competition.
The Act does not prohibit every agreement that limits commercial
freedom. Certain arrangements may qualify for exemption where they generate
efficiencies or benefits that outweigh restrictive effects and satisfy
statutory conditions. This distinction matters because legitimate
collaborations, including some research or supply arrangements, can improve
customer outcomes. Competition law therefore requires analysis of substance and
market effect, rather than treating every commercial cooperation between businesses
as unlawful or suspicious.
The Chapter I
Prohibition
The Chapter I prohibition of the Competition Act 1998 targets agreements
between undertakings, decisions by associations and concerted practices that
prevent, restrict or distort competition within the United Kingdom. Its scope
is deliberately broad because anti-competitive coordination can arise through
formal contracts, informal understandings or patterns of cooperation. The
central question is whether businesses that should compete independently have
instead substituted coordination for the uncertainty and rivalry expected
within markets.
An agreement can infringe Chapter I because of its object or its effect.
Some arrangements are considered harmful by their very nature, including forms
of price-fixing, market-sharing and bid-rigging, without requiring extensive
proof of actual market damage. Other arrangements require examination of their
practical effects on competition. This distinction allows enforcement to
address both obviously restrictive conduct and commercial arrangements whose
competitive consequences depend upon market circumstances.
Chapter I does not render all forms of cooperation unlawful. Some
agreements fall outside the prohibition or qualify for exemption where they
generate efficiencies, improve production or distribution, promote technical or
economic progress, and provide customers with a fair share of the resulting
benefits. The distinction matters for procurement because consortium bids,
research collaborations and supply arrangements can strengthen competition,
whereas coordination intended to suppress independent rivalry can undermine it.
Many of the cases discussed in this article date from before the end of
the Brexit transition period, when infringements were typically pursued under
Chapter I alongside the equivalent EU prohibition, Article 101 of the Treaty on
the Functioning of the European Union. Since 31 December 2020, Chapter I has
operated as a free-standing UK prohibition, with the CMA as primary domestic
enforcer. However, the underlying legal tests remain closely aligned with the
earlier body of EU case law.
Cartels –
Cooperation Behind the Appearance of Competition
A cartel exists when competing businesses coordinate rather than compete
independently, usually to influence prices, customers, territories, output or
tender outcomes. The arrangement may be explicit, informal or concealed, but
its purpose is to replace genuine rivalry with cooperation that benefits
participants at customers’ expense. Cartels can operate behind apparently
normal market activity, making several suppliers appear competitive even though
important commercial decisions have been coordinated between them in advance.
Competition authorities regard cartels as particularly serious because
they strike directly at the competitive process. Unlike legitimate
collaboration, which may create efficiencies, cartel conduct is designed to
reduce uncertainty among rivals and protect participants from competitive
pressure. Customers can face higher prices, poorer service, reduced choice and
weaker innovation, while efficient suppliers may be denied opportunities. The
damage extends beyond individual transactions to the market’s structure and
credibility.
Bid rigging is one of the clearest examples of cartel behaviour in
procurement. Competitors may agree on who should win, submit deliberately high
cover bids, suppress bids, or rotate contracts among themselves. The tender
process can appear compliant while the outcome has been predetermined. Buyers
may believe competitive tension has delivered value for money, when in reality
bidders have collectively weakened the competition that the procurement
exercise was intended to create.
The construction sector has provided the starkest example in the UK. In
2009 the Office of Fair Trading fined 103 construction firms a total of £129.5
million for bid-rigging across around 199 tenders between 2000 and 2006, mostly
through cover pricing; six instances also involved secret compensation payments
to losing bidders of between £2,500 and £60,000. The case showed how cartel
behaviour can become normalised within an industry when procurement teams
examine tenders individually rather than across markets.
Cartels are difficult to detect because participants have strong
incentives to conceal their cooperation. Communications may be informal, coded
or conducted outside official tender channels, while bids can be designed to
look independent. This secrecy increases the importance of procurement
vigilance, data analysis and competition-law awareness. Treating cartel
behaviour as a commercial risk helps organisations protect value, maintain
supplier confidence and preserve markets in which genuine competition can
function effectively.
The Criminal
Cartel Offence
The Enterprise Act 2002 created a criminal cartel offence aimed at
individuals who agree that businesses will engage in serious forms of
collusion. These include price-fixing, market-sharing, bid-rigging and output
restrictions. The offence sits alongside the civil competition regime but
serves a different purpose: it can impose personal criminal responsibility
where an individual helps create or implement arrangements that undermine
genuine competition between businesses within markets.
Corporate liability and individual criminal liability are therefore
distinct. A company may infringe the Chapter I prohibition and face substantial
financial penalties without every employee involved committing a criminal
offence. Conversely, the Enterprise Act focuses on particular agreements made
by individuals. This distinction matters because enforcement can proceed
against the undertaking under competition law, while separate criminal
proceedings may be brought against the individuals involved.
Since 1 April 2014, prosecutors have not needed to prove dishonesty for
cartel agreements falling within the amended offence. The Enterprise and
Regulatory Reform Act 2013 removed that requirement while introducing statutory
exclusions and defences. The change strengthened the offence by focusing on
prohibited arrangements and the individual’s participation. However, criminal
liability remains subject to specific legal conditions that must be assessed
before conclusions are reached.
The consequences can be severe. A person convicted on indictment of the
cartel offence may receive up to five years’ imprisonment, an unlimited fine,
or both. In England, Wales and Northern Ireland, prosecutions may be brought by
the CMA or the Serious Fraud Office, or with the CMA’s consent. The possibility
of imprisonment distinguishes cartel offending from corporate non-compliance
and reinforces why procurement-facing staff require competition-law awareness.
Successful prosecutions remain rare. The first convictions under the
original cartel offence came in the 2008 Marine Hose case, in which three
individuals pleaded guilty to rigging bids for marine hose supplies used in the
oil and defence industries. They received prison terms of between 20 months and
two-and-a-half years, director disqualifications of five to seven years, and
confiscation orders totalling more than £1 million. A further conviction
followed in 2015, when Nigel Snee pleaded guilty in the galvanised steel
water-tanks cartel case.
The Competition
and Markets Authority
The Competition and Markets Authority is the United Kingdom’s principal
competition regulator, responsible for investigating suspected breaches of the
Competition Act 1998 and pursuing serious cartel conduct. Its role extends
beyond reacting to complaints: the CMA gathers intelligence, assesses markets,
opens formal investigations and decides whether enforcement is justified. In
procurement-related cases, its work helps determine whether apparently
independent suppliers have coordinated behaviour that restricts genuine market
competition.
Once a formal investigation begins, the CMA has extensive
information-gathering powers. It can issue statutory requests requiring
businesses or individuals to provide specified documents and information,
answer oral questions, conduct compulsory interviews, and enter business
premises. In appropriate circumstances, investigators may carry out unannounced
inspections, commonly described as dawn raids, and can search premises under
warrant, obtaining evidence that cartel participants might otherwise deliberately
conceal.
Cartel investigations often rely upon more than documents supplied
voluntarily. The CMA may examine emails, messaging records, tender files,
pricing information, and communications between competitors, and obtain
material from customers, suppliers, and other market participants.
Investigators can compare bidding behaviour across procurements to identify
patterns inconsistent with independent competition. Reconstructing commercial
relationships is particularly important because cartel arrangements are frequently
informal, concealed and deliberately designed to leave limited documentary
evidence.
The CMA can impose substantial financial penalties where it establishes
an infringement of competition law and can pursue director disqualification
where management conduct warrants action. It may also conduct criminal
investigations into the cartel offence and, in England, Wales and Northern
Ireland, bring prosecutions. Enforcement therefore extends beyond the offending
business: directors and employees may face personal consequences where their
involvement, knowledge, or failure to act satisfies the relevant legal tests.
Leniency is an important feature of the CMA’s cartel enforcement
strategy because secret arrangements can be difficult to uncover. Businesses or
individuals that disclose their involvement and cooperate fully may receive
immunity or reductions in penalties, depending upon timing and circumstances. The
prospect of favourable treatment creates instability within cartels: each
participant knows another member may approach the regulator first, making
secrecy harder to maintain and increasing the likelihood of detection.
The Consequences
of Breaking Competition Law
Breaching competition law can expose businesses and individuals to
consequences that extend far beyond an adverse regulatory finding. The
enforcement regime combines financial penalties, civil claims, director
disqualification and, for certain cartel conduct, criminal sanctions.
Businesses may also suffer damaged customer relationships, disrupted management
attention and reduced opportunities to secure future work. The seriousness of
these consequences reflects the wider harm caused when competitors replace
independent rivalry with secret, unlawful coordination.
For businesses, the most immediate risk is a financial penalty of up to
10% of annual worldwide turnover. In 2023, the CMA fined ten demolition and
asbestos-removal firms £59.3 million for rigging bids on 19 contracts worth
over £150 million, including work for the Metropolitan Police, the University
of Oxford and Selfridges. Erith received a £17.6 million penalty and Keltbray a
£16 million penalty, demonstrating how collusive tendering can turn profitable
contracts into major financial liabilities.
Regulatory fines do not necessarily end financial exposure. Customers
and other parties that suffer loss due to anti-competitive conduct may seek
damages, potentially adding substantial civil liabilities to regulatory
penalties. A buyer that paid inflated prices because suppliers colluded may
therefore seek compensation for the resulting overcharge. Agreements infringing
competition law can also be unenforceable, creating further contractual
uncertainty around commercial arrangements built on the prohibited conduct
itself.
Directors can face consequences independently of penalties imposed upon
their companies. Competition disqualification orders or undertakings can
prevent an individual from acting as a company director for up to 15 years.
Following the demolition cartel investigation, former Erith director David
Darsey was disqualified for 5 years and 10 months, and Michael Cantillon for 7
years and 6 months. Such sanctions show that responsibility can carry severe
and lasting personal consequences.
Individual involvement in serious cartel conduct can cross into criminal
liability, as the Marine Hose case discussed earlier demonstrates.
Price-fixing, market-sharing, bid-rigging and output restrictions may
constitute the criminal cartel offence under the Enterprise Act 2002, with
conviction carrying up to five years’ imprisonment, an unlimited fine, or both.
Criminal proceedings therefore differ fundamentally from corporate competition
enforcement, exposing those personally involved to punishment that can affect both
liberty and finances.
Competition infringements can also curtail access to public procurement
opportunities. Under the Procurement Act 2023, established cartel infringements
can engage mandatory exclusion grounds, while potential competition-law
infringements may engage discretionary exclusion grounds. Qualifying suppliers
may also be entered on the central debarment list, preventing participation in
covered public procurements for up to five years. A supplier may therefore face
consequences long after the original conduct occurred, particularly where
remedial action fails to demonstrate that recurrence is unlikely.
Reputational damage may prove equally difficult to contain. Competition
investigations are public, often lengthy, and capable of associating an organisation’s
name with price-fixing, bid-rigging or market manipulation for years. Customers
may reconsider relationships, employees can lose confidence and lenders or
investors may reassess governance standards. Management time, legal costs and
compliance remediation add further burdens beyond the fines imposed by
regulators.
Price Fixing
Price fixing occurs when competitors agree, coordinate, or otherwise
align the prices or commercial terms they will offer rather than deciding them
independently. The arrangement may concern headline prices, discounts, margins,
fees, surcharges, credit terms or planned increases. In procurement, suppliers
might agree minimum tender prices or determine how far each will discount. Such
coordination eliminates genuine price competition and can force buyers to pay
more than the market would otherwise charge.
Price fixing does not require every participant to charge the same
amount. Competitors may agree a pricing formula, minimum margin, discount
ceiling or sequence of increases while still submitting different figures. The
commercial effect can be equally damaging because independent decision-making
has been replaced by coordination. Buyers may therefore see apparently varied
tenders that conceal an underlying agreement governing the range within which
suppliers are prepared to compete.
A clear domestic example involved four Berkshire estate agents – Michael
Hardy, Prospect, Richard Worth and Romans – who for almost seven years fixed
minimum commission rates for residential sales across Wokingham, Winnersh,
Crowthorne, Bracknell and Warfield. The CMA fined the first three companies a
combined £605,519 in 2019; Romans avoided a fine by reporting the arrangement.
Local homeowners were left unable to negotiate competitive rates or genuinely
shop around.
Market Sharing
Market sharing occurs when competitors agree to divide customers,
contracts, sectors or categories of work rather than compete freely for them.
Each business may be allocated particular clients, product lines or types of
opportunity, with the understanding that rivals will not challenge its
position. The arrangement can preserve existing relationships and margins, but
it does so by removing choices that customers would otherwise expect from an
independently functioning competitive market.
Such agreements do not need to allocate every customer or eliminate all
rivalry. Competitors may respect selected accounts, avoid bidding for certain
contracts or agree that one supplier will concentrate on a particular sector
while another pursues different work. The market can still appear competitive
because businesses remain active elsewhere. What matters is that decisions
about whom to pursue are influenced by coordination rather than each supplier’s
independent commercial judgement.
The precast concrete drainage cartel shows how entrenched market sharing
can become. Between 2006 and 2013, FP McCann, Stanton Bonna Concrete and CPM
Group divided customers, fixed prices and exchanged sensitive information,
building a combined market share approaching 100%; the CMA fined them over £36
million. Customers included engineering and construction firms and local and
national government. The bidding indicators that can help flag such allocation
are addressed in the companion article on detecting suspicious bids.
Geographical
Market Sharing
Geographical market sharing occurs when competitors agree that
particular regions, counties, or territories will effectively be allocated to
designated suppliers. Rather than independently deciding where to compete,
businesses avoid challenging one another within their allocated areas.
Customers may still receive bids and see several firms operating nationally,
yet genuine rivalry is weakened locally. The arrangement protects established
positions, reduces competitive pressure and can allow prices or margins to
remain artificially high.
Genuine geographic specialisation – often shaped by transport costs,
depot locations or regional capacity – can look outwardly identical to
coordinated territorial allocation. Distinguishing the two requires examining
the underlying commercial rationale rather than the headline pattern of who
bids where. The specific bidding and pricing indicators that can help make that
distinction are addressed in greater detail in the companion article on
detecting suspicious bids.
The CMA treats territorial allocation as a form of market sharing
because competitors decide collectively where each will compete. Its cartel
guidance identifies agreements that restrict marketing or sales to particular
territories or customer groups as potentially unlawful. For buyers, recurring
geographic patterns warrant examination alongside pricing, participation, and
supplier communications, though no single pattern proves collusion without
convincing evidence of coordination.
Customer
Allocation
Customer allocation occurs when competitors agree not to pursue one another’s
established customers or contracts, effectively dividing demand between
themselves in advance. Instead of each supplier independently deciding which
opportunities to pursue, businesses preserve existing relationships through
mutual restraint. The customer may still believe several suppliers are
available, but genuine rivalry has been weakened because competitors have
agreed, formally or informally, not to challenge one another aggressively for
particular accounts.
Such arrangements can be subtle. A supplier may submit an intentionally
weak quotation for a rival’s customer, decline opportunities it would normally
pursue, or avoid offering discounts that could win the business. In return, the
competitor may behave similarly elsewhere. This reciprocal restraint can
stabilise prices and customer relationships for cartel members while depriving
buyers of the lower prices, better service or innovation that genuine
competitive pressure might otherwise produce.
A clear UK example involved Thomas Armstrong (Timber) Ltd and Hoffman
Thornwood Ltd, suppliers of furniture parts to well-known manufacturers
including Silentnight. The CMA found that the companies had agreed not to
compete on price and to divide customers between themselves; BHK (UK) Ltd also
admitted its involvement and received leniency. Fines totalling £2.8 million
were imposed in 2017, showing how customer allocation can operate alongside
price coordination and bid manipulation within a single cartel.
Procurement teams should therefore examine the full pattern of a
relationship rather than assume that long-standing supplier loyalty reflects
normal market preference. The specific bidding and tendering indicators that
can help identify customer allocation are addressed in the companion article on
detecting suspicious bids. The furniture parts case is a reminder that such
arrangements can persist for years before being uncovered – typically through a
leniency application rather than through buyer detection alone.
Output and
Capacity Restrictions
Output and capacity restrictions arise when competitors agree to limit
what they produce, supply or make available to customers. By coordinating
volumes, businesses can reduce market supply, support higher prices or avoid
the commercial pressure created by excess capacity. Such arrangements may
concern production quotas, factory utilisation, service availability or planned
expansion. Competition law treats output limitation seriously because customers
lose the benefits that independent supply decisions would otherwise create.
The competitive harm can be significant even where prices are not
expressly fixed. If suppliers collectively restrict output, scarcity may push
prices upwards, weaken buyers’ negotiating power and reduce incentives to
improve efficiency. Competitors may also agree not to expand capacity, to
postpone investment, or to withdraw particular products. These arrangements can
stabilise market shares and margins, effectively replacing commercial rivalry
with coordinated decisions about how much supply the market will receive.
Not every production or capacity agreement is unlawful. Competitors may
sometimes cooperate legitimately where joint production, shared infrastructure
or capacity arrangements create efficiencies that could not be achieved
independently. The CMA’s horizontal agreements guidance recognises that
production agreements require assessment of wider competitive effects. The
critical distinction is whether cooperation improves efficiency while
preserving rivalry, or whether output is deliberately restricted to suppress
competition or manipulate market conditions.
The CMA’s investigation into P&O Ferries and DFDS illustrates that
distinction. The companies operated a capacity-sharing agreement on the
Dover–Calais route, allowing freight customers booked with one operator to
travel on the other’s vessels. The CMA raised competition concerns but accepted
binding commitments in August 2022 rather than finding a cartel infringement,
recognising the agreement’s material benefits for freight customers alongside
the need for safeguards.
Procurement teams should weigh capacity behaviour alongside pricing and
bidding patterns, recognising that coordinated shortages can be difficult to
distinguish from genuine cost pressures or supply chain disruptions. As with
market sharing, the specific behavioural indicators are addressed more fully in
the companion article on detecting suspicious bids; the essential safeguard
here is testing capacity claims against independent market evidence rather than
relying on supplier assurance alone.
Information
Exchange
Information exchange can restrict competition when rivals share
commercially sensitive material that reduces uncertainty about how each intends
to behave. Future prices, discounts, margins, bidding intentions, costs,
capacity plans, customer strategies and sales forecasts are particularly
sensitive because they can reveal decisions that competitors should determine
independently. Once businesses know how rivals are likely to act, competitive
pressure may weaken even without an explicit agreement to fix prices for
customers.
The risk depends heavily on the nature, timing and detail of the
information exchanged. Future-facing, current and company-specific information
generally raises greater concern than historical, aggregated or publicly
available data. A competitor that learns of another supplier’s intended price
increase, planned tender strategy or spare capacity can adjust its own
behaviour accordingly. The result may be less aggressive competition, because
the uncertainty that ordinarily forces businesses to anticipate rival responses
has been reduced.
Information can be exchanged directly through meetings, emails,
messaging applications or telephone calls, but indirect routes carry similar
risk. Trade associations, consultants, customers, benchmarking exercises or
digital platforms may act as intermediaries through which competitors obtain
sensitive intelligence. The legal analysis therefore looks at substance rather
than the communication channel: businesses cannot avoid competition-law
concerns simply because commercially sensitive material passed through a third
party rather than directly between rivals.
The CMA’s 2025 decision on UK government bonds shows how easily this can
happen even in sophisticated financial markets. Traders at Citi, HSBC, Morgan
Stanley and the Royal Bank of Canada shared sensitive pricing information about
gilt auctions in private one-to-one Bloomberg chats between 2009 and 2013. The
four banks were fined over £104 million; Deutsche Bank avoided a fine by
reporting its own involvement first. Gilts finance UK public spending,
underlining that this risk extends well beyond any single sector.
Procurement professionals need to consider the information they release
during market engagement and tendering. Publishing one bidder’s confidential
pricing, indicating competitors’ likely approaches or disclosing
supplier-specific capacity can inadvertently reduce competitive uncertainty.
Transparency remains important, particularly in public procurement, but it
should not become a mechanism for competitors to monitor one another’s
strategies. Buyers should separate information needed for fairness and
accountability from material that could facilitate coordinated behaviour.
Trade
Associations, Industry Meetings and Informal Networks
Trade associations and industry meetings perform legitimate functions:
representing sectors, developing standards, raising policy concerns, and
allowing businesses to discuss common challenges. The risk lies not in the
forum itself but in what happens inside it. Discussions of future prices,
customers, output, capacity, or bidding intentions can quietly tip a legitimate
gathering into a channel for coordination, and a routine-looking agenda offers
no protection if what is actually discussed is competitively sensitive.
Informal networks create similar risks because unlawful coordination
does not require a meeting or a written agreement. Conversations over dinner,
messaging groups, telephone calls or conference discussions can become
problematic if competitors reveal sensitive plans or encourage mutual
restraint. The CMA advises trade associations to prevent such exchanges and
expects members to leave and report meetings where competitively sensitive
information is raised; an informal or social setting offers no legal protection.
A practical example arose in 2015 when the CMA fined an association of
estate and lettings agents, three member firms and a newspaper publisher more
than £735,000. The association restricted members from advertising fees or
discounts in a local newspaper, while two agents extended the arrangement to
non-members. The case showed that trade bodies can themselves facilitate
anti-competitive conduct when their rules restrict members’ independent
competition for customers.
Businesses should therefore treat industry participation as a compliance
issue rather than a reason to avoid legitimate engagement. Associations can
reduce risk through clear competition policies, disciplined agendas, recorded
minutes and firm rules against sensitive discussions. Representatives should
challenge inappropriate exchanges immediately and, where necessary, leave.
Procurement professionals should apply similar caution during market
engagement, ensuring that supplier forums do not inadvertently become
opportunities to share strategies or coordinate behaviour.
From Conversation
to Concerted Practice
An unlawful arrangement need not appear in a contract, memorandum or
written cartel agreement. Competition law looks at what businesses actually do
and understand, not simply what they document. Competitors can cross the line
through conversations, repeated signals or shared expectations about future
conduct. Where contact replaces independent commercial judgement with
coordination, the absence of signatures or formal wording does not prevent the
behaviour from becoming legally significant.
A concerted practice can arise where competitors knowingly reduce
uncertainty about one another’s future conduct without reaching a conventional
agreement. One business may reveal intended prices, bidding plans, customers,
or capacity, while another adjusts its behaviour in response; the disclosure
need not even be reciprocated to be legally significant. The central question
is whether competitive decisions remain genuinely independent once contact of
this kind has taken place between rivals.
This is particularly relevant in procurement because suppliers may
communicate in ways that appear casual. A discussion about who intends to bid,
which customer is regarded as another firm’s territory, or what price level the
market should support can influence tender behaviour. Even without an explicit
promise, participants may understand how they are expected to act – a shared
understanding that can weaken rivalry while leaving little documentary trail
for buyers to discover.
The CMA’s evidence in recent cases illustrates how such conduct is
proved without a written agreement. In the precast concrete drainage cartel,
investigators relied on covertly recorded meetings; in the UK government bonds
case, the decisive evidence was a handful of one-to-one Bloomberg messages
exchanged on specific dates. Neither case turned on a signed contract – both
turned on what the parties said to each other and how their subsequent market
behaviour changed as a result.
Summary –
Legitimate Cooperation or Illegal Collusion?
Legitimate cooperation between businesses can strengthen competition by
combining capabilities, spreading risk, or enabling suppliers to pursue
opportunities they could not pursue alone. Joint ventures, consortium bids and
shared production arrangements may create efficiencies, expand capacity or
encourage innovation. Competition law does not prohibit collaboration merely
because competitors work together. The critical question is whether cooperation
improves market outcomes without unnecessarily reducing the independent rivalry
customers would otherwise receive.
Consortium bidding provides a clear example in procurement. Two
suppliers may lawfully submit a joint tender where neither could meet the
contract requirements alone, perhaps because one lacks geographic coverage,
specialist expertise or sufficient capacity. Problems arise where capable
competitors form a consortium primarily to avoid competing against each other.
The commercial rationale, the proportionality of the arrangement and the effect
on remaining competition therefore require careful assessment before
collaboration is assumed to be benign.
Subcontracting can also be entirely legitimate. A prime contractor may
appoint another supplier because specialist skills, resources or additional
capacity are genuinely required to perform the contract. Concern increases when
supposedly independent competitors coordinate before tendering, agree on who
will win, and compensate the other through subsequent subcontract work. The
subcontract itself is not unlawful; the competition risk lies in whether it
forms part of an arrangement designed to manipulate the bidding process.
Benchmarking and information sharing can similarly support efficiency
when businesses compare historic, aggregated or anonymised performance data.
Organisations may learn from industry standards without revealing commercially
sensitive strategies. The position changes when benchmarking exposes future
prices, margins, customer intentions, capacity or tender plans. Information
that enables rivals to predict one another’s behaviour can turn an apparently
useful exercise into a mechanism for sustaining coordination between
competitors.
Supply-chain cooperation often requires businesses to exchange information, coordinate logistics or develop common technical standards. These arrangements can lower costs, improve resilience and deliver benefits to customers when limited to what is necessary for the collaboration. The CMA recognises that many business collaborations are lawful and can promote growth. Participants should nonetheless avoid extending cooperation into unrelated pricing, customer allocation or market-sharing decisions that each business should continue to make independently.
The dividing line is therefore based on substance rather than labels. Calling an arrangement a joint venture, consortium, subcontract or benchmarking project does not protect conduct intended to suppress rivalry. Procurement professionals should ask whether the parties genuinely need to cooperate, whether restrictions are proportionate and whether each remains free to compete elsewhere. Legitimate collaboration creates capability or efficiency; illegal collusion removes uncertainty and protects competitors from genuine competitive pressure.
Additional
articles can be found at Procurement Made Easy. This site looks at procurement
issues to assist organisations and people in increasing the quality,
efficiency, and effectiveness of their product and service supply to the
customers' delight. ©️ Procurement Made Easy. All rights reserved.
Further Reading
• Competition and Markets
Authority, “Cheating or Competing?” – competition law compliance campaign,
gov.uk
• Competition and Markets
Authority, cartel and Chapter I case decisions cited in this article,
gov.uk/cma-cases
• Competition and Markets
Authority, guidance on horizontal agreements and cartel prosecution, gov.uk
• Competition Act 1998,
legislation.gov.uk
• Enterprise Act 2002, Part 6
(the cartel offence), legislation.gov.uk
• Procurement Act 2023 and
Cabinet Office guidance on exclusion and debarment, gov.uk
• OECD, Guidelines for Fighting
Bid Rigging in Public Procurement (2025 update), oecd.org
• House of Commons Library, “Procurement
statistics: a short guide,” commonslibrary.parliament.uk
• HM Treasury, Public Expenditure
Statistical Analyses 2025
• Whish, R. and Bailey, D.,
Competition Law, Oxford University Press
