Albert Sanchez-Graells ‘Competition and Public Procurement’ (2018) Journal of European Competition Law & Practice 9(8) 55

This piece, available here, surveys the interaction between competition and public procurement law in Europe. It is structured as follows: Section II looks at recent examples of competition enforcement against bid rigging. Competition law enforcement in public procurement settings remains a top enforcement priority for competition authorities in Europe. This is not only clear in the practice of the European Commission, but is also demonstrated by a continuous string of cases brought all over Europe. Recent examples of this can be found in Poland (car towing and parking services), Belgium (railway infrastructure), Latvia (security services, distribution of professional stage equipment), Ireland (retail distribution), Greece (construction), Italy (consulting services), Lithuania (construction), Denmark (construction, passenger transportation), Romania (electricity consumption equipment), or Spain (advertising services). A continued focus on competition enforcement against bid-rigging seems adequate, given the continued trend towards less competitive tenders for public contracts over the last decade or so—in part, as a result of procurement aggregation strategies, but also as a result…

David Imhof, Yavuz Karagök and Samuel Rutz on ‘Screening For Bid Rigging—Does It Work?’ (2018) Journal of Competition Law & Economics 14(2) 235

The title of this paper, available here, is a bit misleading, since individuals who developed a screening tool for the Swiss competition authority wrote it, and the paper is devoted to describing how the method works and how successful it has been in practice. To summarise, the paper proposes a method to detect bid rigging that is particularly suited to address the problem of partial collusion, i.e. collusion that does not involve all firms and/or all contracts in a specific dataset. It explains how the authors applied mutually reinforcing screens to a Swiss road construction procurement dataset in which no prior information about collusion was available, and how this method succeeded in isolating a group of “suspicious” firms. It further describes how the screen led the Swiss Competition Commission (COMCO) to opening an investigation and sanctioning the identified “suspicious” firms for bid rigging. The paper is structured as follows: Section II presents literature on screening methods. The growing literature on cartel…

Martin Huber and David Imhof ‘Machine Learning with Screens for Detecting Bid-Rigging Cartels’ (2019) International Journal of Industrial Organization

This paper, available here, combines machine-learning techniques with statistical screens computed from the distribution of bids in tenders within the Swiss construction sector to predict collusion through bid-rigging cartels, leading to a correct classification of 84% of bidding processes as collusive or non-collusive out of 584 tenders. The paper is structured follows: Section 2 reviews the data set. The data includes four bid-rigging cartels, comprising 584 tenders in the Swiss road construction sector with 3,799 bids for a market volume of roughly 370 million Swiss francs. For each cartel, the dataset allows one to observe collusive cartel periods as well as competitive post-cartel periods. In doing so, the dataset is ideal for detecting bid-rigging cartels, in that it reflects periods of undisputed collusion and periods of undisputed competition. Collusive agreements were comparable across the four bid-rigging cartels. In all four cartels, the procurement procedure was based on a first-price sealed bid auction. The cartels required two steps: first, to designate…

Robert D. Anderson, Alison Jones and Bill Kovacic ‘Preventing Corruption, Supplier Collusion and the Corrosion of Civic Trust: A Procompetitive Program to Improve the Effectiveness and Legitimacy of Public Procurement’ (forthcoming, George Mason Law Review)

You can find this paper here. There is also a shorter version of the paper available here. Governments around the world spend an estimated US$9.5 trillion on goods and services each year. This accounts for roughly one third of government expenditures (29.1% on average in OECD countries) and 10% to 20% of total gross domestic product (“GDP”) in many nations. Furthermore, public procurement is an essential input to the delivery of broader public services and functions of government that are vital for growth, development and social welfare. The special procedures that characterise public procurement are necessary in light of the principal-agent problem and moral hazards that public procurement entails. Conventional responses to the problems of corruption and supplier collusion in public procurement comprise two broad sets of tools. The first, focusing on corruption issues, involves measures to increase the transparency of public procurement and to strengthen the accountability of responsible public officials for malfeasance. The second, aimed at preventing supplier collusion,…

John Connor and Dan Werner  ‘Variation in Bid-Rigging Cartels’ Overcharges: An Exploratory Study’

This working paper  is available here. A summary version, called ‘New Research on the Effectiveness of Bidding Rings: Implications for Competition Policies’ (2019) CPI Antitrust Chronicle April,  can be found here but I have to say I found this shorter version to be slightly confusing, so I would advise you to read the longer paper. There seems to be a consensus that bid rigging is more harmful and deserving of higher penalties than ordinary price fixing violations. Reflecting this, there is empirical evidence that antitrust penalties are more severe for rings than for classic price-fixing cartels. A number of jurisdictions, such as Germany and Italy, impose criminal liability only for bid rigging infringements, but not for other types of cartel. Multilateral organisations, such as the OECD and the International Competition Network, have given special attention to the problems of enforcement against bid rigging. Yet, this antipathy toward bid rigging relative to the more common form of collusive conduct (classic price…

Ioannis Lianos’ ‘Blockchain Competition’ in Ph. Hacker, I. Lianos, G. Dimitropoulos & S. Eich, Regulating Blockchain: Political and Legal Challenges (OUP, 2019, forthcoming)

I highly recommend this paper, available here. I was unable to review it on time, in part because it is long, demanding and comprehensive, as is often the case with Ioannis’ papers. If you are unable to read this 93-page primer, many of the main points are neatly summarised in this video interview Ioannis gave at the OECD. If you have a bit of time, I suggest you read the discussion of the various potential competition concerns raised by the blockchain from an EU law perspective in the paper’s last 25 pages or so (starting on page 65).

Konstantinos Stylianou ‘What can the first blockchain antitrust case teach us about the crypto-economy?’

This note, available here, describes the first ever blockchain antitrust case. In December 2018, UnitedCorp, a diversified technology company, sued Bitmain, the largest Bitcoin mining pool, in the first blockchain dispute with a focus on antitrust (United American Corp. v. Bitmain, Inc. Complaint). The case, pending before the District Court for the Southern District of Florida, is at its core a familiar collusion claim. The facts and allegations are as follows. UnitedCorp offers a number of blockchain solutions. These include BlockNum, which allows the execution of blockchain transactions using regular phone numbers; and BlockchainDome, a cryptocurrency mining system that uses the heat generated from the mining process to heat greenhouses for agricultural purposes. Both technologies rely on a cryptocurrency called Bitcoin Cash, one of the hundreds of publicly available (permissionless) cryptocurrencies. As with other cryptocurrencies, Bitcoin Cash’s whitepaper and protocols set out its rules and governance. In November 2018, protocol developers disagreed on how to update Bitcoin Cash’s protocols. This resulted…

Konstantinos Stylianou and Nic Carter ‘Calculating Cryptoasset Market Shares’

A number of laws and regulations, such as antitrust laws and financial regulations, are informed by the relative economic size of the companies or assets under investigation. For the blockchain, this means that cryptoassets – i.e. digital instruments of economic value that are developed and traded on blockchain networks (e.g. cryptocurrencies, tokenised securities, crypto-derivatives, etc.) – with larger market shares are likelier targets for law enforcement or regulation. Properly measuring the economic footprint of cryptoassets becomes imperative. However, measuring the relative economic size of cryptoassets has proven challenging for multiple reasons. This paper. available here, presents the first systematic examination of the economic footprint of cryptoassets and their constituent actors, with the goal of providing comprehensive guidance into the size of the crypto-economy. The article proceeds in three steps: Part II explains the function and challenges of market share calculation. While some rules and obligations apply uniformly across industries, many are contingent on the relative size of the regulated subjects, meaning that smaller…

Thibault Schrepel ‘Collusion by Blockchain and Smart Contracts’ 33 Harvard Journal of Law Technology (forthcoming, 2019)

This article, available here, introduces the first taxonomy of collusion on the blockchain. It explores the functioning, robustness and limits of such collusive practices, and highlights how companies may use smart contracts and sophisticated algorithms to collude in the blockchain environment.   An introductory section describes blockchain technology and its potential uses. A blockchain is an open and distributed ledger recording all sorts of transactions between users. Consensus mechanisms are used to make sure that information and transactions are recorded on the blockchain. This, in turn, means that data and records on the blockchain cannot be easily modified, which in turn breeds trust. Blockchains assign three different roles to their users. Blockchain users may read the information on the blockchain, propose new transactions and validate the blocks. On public (“permissionless”) blockchain, all users can read and propose new entries into the blockchain. Block validation is restricted to some users only, following a consensus mechanism. On private (“permissioned”) blockchains, all three actions can…

The Blockchain (R)evolution and the Role of Antitrust

This piece, available here, explores a number of (EU) antitrust issues that may arise in the context of blockchains. It is structured as follows: The paper starts by explaining what the blockchain is and what it can do. The blockchain is a technology that uses a software protocol based on cryptography to keep exchanges secure. It allows anybody in the chain to see all transactions on it, removes the need for trusted intermediaries keeping a transaction ledger, and ensures that the transaction ledger is immutable and very hard to tamper with. Blockchains can be divided into open and permissioned networks. Open (i.e. public) networks are accessible to anyone, so that the database is truly public information. This is the case of the blockchains underlying Bitcoin and Ethereum. Permissioned (i.e. private) networks make access conditional upon authorisation by the owner or owners of the network. An example of a permissioned network is Corda, a distributed ledger platform designed specifically for financial institutions to…