Bid-rigging is prohibited as it eliminates competition among suppliers, increases costs, and harms customers/consumers. Regardless of whether bid-rigging takes place in the public or in the private sector, the increased costs are inevitably ultimately passed on to the public. Bid-rigging typically involves competitors agreeing to share tenders and/or artificially increase the prices of goods and/or services offered in bids to potential customers.
Bid-rigging constitutes a cartel violation under Article 4 of Law No. 4054 on the Protection of Competition (the "Competition Law"), which prohibits all agreements between companies, trade associations and concerted practices that have (or may have) as their object or effect the prevention, restriction or distortion of competition within a Turkish product or services market or a part thereof. Therefore, bid-rigging may trigger administrative monetary fines and other applicable sanctions under the Competition Law.
Aside from Turkish competition laws, bid-rigging is regulated and prohibited under Article 17 of Law No. 4734 on Public Procurement. Bid-riggers may therefore face debarment (i.e. blacklisting) from public tenders (Article 58 of Law No. 4734 on Public Procurement).The blacklisting would also apply to (i) companies in which the violator holds a capital stake of 50% or more and (ii) persons or companies that hold 50% or more of the shares of the violator. The blacklisting may last one to two years, depending on the seriousness of the violation. The blacklisting may extend for a further period of one to three years if the violation is criminally prosecuted and the defendants are ultimately convicted. The Ministry of Internal Affairs would decide whether to blacklist the violator company within 45 days from the date on which the violation has been established at the latest. The blacklisting, if any, is published on the Turkish Official Gazette and distributed across the relevant Turkish ministries. The blacklisting takes effect when published on the Turkish Official Gazette. The Public Procurement Authority would record the blacklisting onto its logs. These consequences would not apply to bid-rigging in private tenders.
Bid-rigging in public tenders may also trigger criminal consequences (Article 235 of the Turkish Penal Code). Bid-rigging is punishable by 3 to 7 years of imprisonment for the violator(s). These sanctions apply to individuals only. The criminal sanctions a company might face are (i) confiscation of property (i.e. confiscation of the benefits obtained through bid-rigging), and (ii) cancellation of the relevant license(s), if any (Section 242 of the Turkish Criminal Code). Again, these sanctions would not be triggered in the case of bid-rigging in private tenders.
The tender law and criminal law consequences for bid-rigging (and rigging the performance of the contract) are in addition to the above-summarized competition law consequences. Therefore, criminal sanctions might apply in addition to the blacklisting and the administrative monetary fines.
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