Introduction
A recent case in the construction industry has highlighted that
the orchestration by competitors of the outcome of tender processes
that would (and should) be otherwise determined by market forces,
can attract significant penalties.
Cover pricing
The term "cover pricing" refers to a practice that
occurs where a company wishes, or believes it is necessary, to be
seen to tender for a particular project but either does not wish to
win the tender; or does not have the time or resources to prepare a
carefully priced tender for that project. The company accordingly
submits a high bid that it does not expect will be successful.
In itself, independently submitting a bid which is higher than
other bids is not illegal. In this case, it was the preceding
communication of cover prices between competitors which, in the
circumstances was construed as engineering the field of prices
submitted during the bidding process. This was found to orchestrate
the ultimate
