Competition Matters

When contracts for goods or services are awarded through the competitive bidding process, coordination among bidders can undermine competition and violate the antitrust laws. Coordination among bidders, often refereed to as “bid-rigging,” can take many forms, including when bidders agree in advance as to which bidder will win the bid. Such anticompetitive conduct deprives purchasers from receiving the best value for the goods or services that they seek.
 
The bidding process should not be manipulated with the hopes of determining a winner in advance, but that is exactly what happened in the case involving Clarence Olson. In September 2021, Olson, a Minnesota concrete contractor, pleaded guilty in federal court to participating in a scheme to eliminate competition in the market for concrete repair and construction services by rigging bids for construction projects issued by local governments and school districts in the state of Minnesota. Olson’s conduct was in violation of Section 1 of the Sherman Act.
 
According to court documents, from as early as 2012 to at least 2017, Olson, while bidding on construction projects with his co-conspirators, agreed to submit bids containing higher pricing than the bids submitted by his co-conspirators. In so doing, Olson ensured that he would lose and his co-conspirators would win. Olson’s co-conspirators would consequently win bids at non-competitive pricing, much to the detriment of purchasers. Moreover, Olson and his co-conspirators were able to rig bids under the guise of “competition.”
 
Bids that are intentionally high or otherwise designed to lose are often referred to as “sham bids” or “cover bids.”  Why would a contractor like Olson agree to help another contractor get a piece of business?  Typically, there is some quid pro quo, such as an understanding that the winner will return the favor by submitting a sham bid to help the loser win another contract, or that the winner will reward the intentional loser with a lucrative subcontracting job.
 
Olson now faces a maximum penalty of 10 years in prison and a $1 million fine for violating Section 1 of the Sherman Act.
 
The circumstances surrounding Clarence Olson serve as a reminder for public purchasers to review bids and watch out for any signs that vendors may be working together to subvert the competitive bidding process. (See previous editions of “Competition Matters” for 10 signs of possible vendor collusion, patterns that can form if vendors collude, physical clues of possible collusion, and other red flags).
 
If you would like to speak with the Antitrust Section of the Ohio Attorney General’s Office about anticompetitive conduct, please call 614-466-4328.