“Bid rigging” and “price fixing” are terms that most contractors are familiar with and recognize as evils. In fact, they are forms of collusion, a type of antitrust violation that can carry stiff criminal and civil penalties. What many contractors do not know, however, is that seemingly harmless action – such as discussing industry-wide pricing with other contractors – can also constitute collusion. The following is an overview on collusion in the transportation construction industry, highlighting the basics that every contractor should know.

Collusion can be defined as an “illegal, secret agreement between two or more parties for a fraudulent or wrongful purpose.”1 Collusion is a crime because it undermines the purpose of competitive bidding – to ensure that public and private consumers receive the best goods and services at the best prices.

Bid rigging, price fixing and market division are the most common types of collusion that result in criminal prosecutions in the highway construction industry.2 Bid rigging occurs when competitors essentially agree in advance who will submit the winning bid on a competitively bid contract.3 Price fixing involves competitors agreeing to raise, fix, or otherwise maintain the price they offer for the goods and services they sell.4 Market division occurs when competitors divide markets, allocating specific customers, products, or regions among themselves.5

Various attributes of the transportation construction industry make it particularly susceptible to collusion. There are a limited number of qualified contractors: the product being procured has restrictive specifications; materials generally cannot easily be substituted; and competitors know each other well through legitimate avenues such as trade associations and shifting employment.6

Despite the risk of incurring substantial penal- ties, collusion remains a problem in public contracting. In particular, with the advent and proliferation of public-private partnership projects, normally competing contractors find themselves working together in clusters. Such close relationships frequently require detailed information exchange. In that process, contractors must be careful not to cross the line into collusion territory and become conspirators.

While some actions are easy to identify as collusive and therefore illegal – such as contractors agreeing which one will submit the winning bid, others are not so obvious – such as contractors agreeing not to bid on the same project. It is also important to note that “agreements” to collude need not be written or expressed. Collusive agreements can be established through a participant’s testimony or by evidence of suspicious bid patterns. Moreover, not all bidders need to participate for collusion to exist. Collusion can involve as few as two people working for separate contractors. Therefore, contractors need to be aware of what types of acts constitute collusion and warn their employees just what to avoid.

Types of Collusion

Essentially, any act that has the effect of restraining competition is collusion and is unlawful. Bid rigging, price fixing and market division are per se, or always, violations of antitrust laws.7 This means that once it is established that a contractor committed one of these acts, the contractor cannot defend itself by justifying the act, such as by showing that the act was necessary to prevent price cutting, that the agreed-upon prices were reasonable, or that the conspirators were only trying to ensure that each had a fair share of the market.

Simply submitting an intentionally high bid is not per se illegal, as contractors may legitimately submit high bids for independent business reasons – such as to remain on a bidders’ list when too busy to handle the work on which the con- tractor is bidding. The key to determining what constitutes collusion is to consider whether competitors are involved and whether the effect of the action is to stifle competition and raise prices.

The following acts are violations of antitrust law.

Bid Rigging

Bid rigging occurs when contractors predetermine who will be the winning bidder on a competitively bid contract. The most frequent types of bid rigging are:

  • Bid Suppression – One or more competitors that have bid or otherwise would be expected to bid withdraw their bid or refrain from bidding so that the designated competitor will be awarded the contract.
  • Complementary Bidding (also called “cover” or “courtesy” bidding) – Certain competitors agree to submit bids that will not be acceptable to the owner, such as bids that are too high or contain unacceptable terms. Complementary bidding is the most common type of bid rigging because it gives the appearance of competitive bidding.
  • Bid Rotation – Competitors submit bids but take turns being the low bidder. Because strict rotation patterns are obvious signs of collusion, the terms of the rotation typically vary; competitors may rotate according to the size of the contract or may allocate award amounts equally or relative to the size of each competitor company.
  • Subcontracting – Big rigging can also occur when competitors that agree to submit the losing bid or not to bid at all receive sub- contracts in return from the successful bidder. The subcontract is frequently more lucrative, dividing the illegally obtained higher contract price between the competitors.8

Price Fixing

Price fixing occurs when competitors agree to raise, fix, or otherwise maintain the price they offer for the goods and services they sell. This does not necessarily mean that competitors set the same price, but rather that the effect is to restrict pricing competition. Price fixing includes agreements to:

  • Establish or adhere to pricing discounts
  • Keep prices firm
  • Eliminate or reduce pricing discounts
  • Adopt a standard price-computing formula
  • Maintain certain price differentials between different types, sizes, or quantities of products
  • Adhere to a minimum price schedule
  • Fix credit terms

Market Division
Market division occurs when competitors divide markets, allocating specific customers, products, or regions among themselves. Competitors may collude by:

  • Agreeing that one competitor is permitted to sell to or bid on contracts let by specific customers or specific types of customers but not on those allocated to conspiring competitors
  • Agreeing to sell to or bid on contracts let by customers only in certain geographic regions, but refusing to sell to (or quote intentionally high prices to) customers in regions allocated to conspiring competitors9

Signs of Possible Collusion

The U.S. Department of Justice Antitrust Division advises state and federal transportation agencies, among others, to detect antitrust violations by watching for certain signs that may indicate collusion. These signs include suspicious bidding patterns, pricing patterns and contractor statements or behaviors.

Suspicious Bids

Bids are suspicious when:

  • The same contractor always wins a particular contract (especially if one or more companies continually submit unsuccessful bids)
  • The same contractors submit bids and appear to take turns being the winning bidder
  • Some bids are considerably higher than the engineer’s cost estimate or previous bids by the same contractor
  • Fewer contractors than normal submit bids
  • A particular contractor bids substantially higher on some projects than others, with no apparent cost or workload differences to account for the disparity
  • Bid prices drop when a new or infrequently bidding contractor submits a bid
  • A winning bidder subcontracts work to a competitor that withdrew its bid or submitted an unsuccessful bid10

Suspicious Price Patterns

Price patterns are suspicious when:

  • Prices remain identical for long periods of time
  • Identical prices were previously different
  • Identical price increases are not supported by increased costs
  • Discounts are eliminated where they were historically given
  • Contractors charge higher prices to local customers than to distant ones11

Suspicious Statements or Behaviors

  • Suspicious statements by or behavior of contractors include:
  • A contractor implying that it has advance knowledge of competitors’ pricing
  • A contractor implying that a particular owner, contract, or region “belongs” to a certain contractor
  • A contractor referring to “courtesy,” “complementary,” “token,” or “cover” bids
  • A contractor implying that it discussed prices or reached an understanding with competitors12

Note that these acts are not proof of collusion, but rather are signs that suggest that collusion may be occurring. Although these acts alone do not violate antitrust laws, a prudent contractor will avoid committing them altogether so as not to even suggest that it is part of a collusion scheme.

Penalties for Collusion

Florida criminal penalties for collusion include up to $1 million in corporate fines and up to $300,000 in individual fines and/or up to three years imprisonment.13 Florida civil penalties include up to $1 million in corporate fines and up to $100,000 in individual fines, plus injunctive relief and liability for treble damages and attorneys’ fees.14 Additionally, conviction of a contract crime such as collusion also is grounds for denial or revocation of a contractor’s FDOT certificate of qualification.15

Federal penalties may also be imposed. Federal criminal penalties range from up to $100 mil- lion in corporate fines and up to $1 million in individual fines and up to 10 years imprisonment.16 Federal civil penalties can impose liability for treble damages and attorneys’ fees, plus allow injunctive and other equitable relief.17


The same behavior that constitutes good business practices – keeping your policies and strategies close to the vest – also shields a contractor from collusive behavior. A contractor should never discuss with other contractors its prices, discounts, profit margins, bid calculation methods, or terms and conditions of sale, at least not without the advice of counsel. Additionally, a contractor should not discuss with other contractors dividing or refusing to deal with specific owners, types of owners, suppliers, or geographic regions. None of those discussions passes the smell test. Trust your nose – they should not occur.


  1. AASHTO Subcomm. on Constr., Collusion in Department of Transportation Contracts, available at http://www.construction.transpor- tation.org/Documents/2003CollusionPresentati onSOC.ppt (last visited April. 16, 2011).
  2. Federal Highway U.S. Dep’t of Transp., Fed. Highway Admin., Code of Ethics Model § III.H, available at http://www.fhwa.dot.gov/construc- tion/cqit/ethcmodl.cfm#s17 (April. 4, 2011).
  3. Jim H. Crumpacker, Upholding the Public Trust, 71 Public Roads, No. 4, Pub. No. FHWA- HRT-08-002 (Jan./Feb. 2008).
  4. Id.
  5. Code of Ethics Model, supra note 2.
  6. See U.S. Dep’t of Just., Price Fixing, Bid Rig- ging, and Market Allocation Schemes: What They Are and What to Look For, available at http://www.justice.gov/atr/public/guide- lines/211578.pdf (last visited April. 15, 2011).
  7. Id.
  8. Id.
  9. Id.
  10. Id.
  11. Id.
  12. Id.
  13. § 542.21, Fla. Stat. (2010).
  14. Id.; § 542.22, Fla. Stat.
  15. § 337.165, Fla. Stat. (2010).
  16. 15 U.S.C. §§ 1, 2 (2006).
  17. 15 U.S.C. §§ 15, 26.


Rob Vezina is the managing shareholder of Vezina, Lawrence & Piscitelli, P.A., Tallahassee, Fort Lauderdale and Miami, practicing in the fields of construction and public contracts law. He received his law degree from Duke University and has for many years provided general counsel services to the FTBA.

Megan Reynolds is an associate in the firm’s Tallahassee office and likewise practices construction and public contracts law. She received her law degree from Florida State University, where she served as editor-in-chief of the FSU Law Review.

This article was originally published in Florida Transportation Builder (Sp. 2011).