Journal of Competition Law and Economics Advance Access originally published online on September 15, 2008
Journal of Competition Law and Economics 2009 5(2):335-360; doi:10.1093/joclec/nhn022
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REGULATING JOINT BIDDING IN PUBLIC PROCUREMENT
Correspondence: E-mail: gianluigi.albano{at}tesoro.it
JEL: H57, K21, D40
Joint bidding is the practice of two or more independent suppliers submitting a single bid, a widespread practice in private and public procurement. This practice may generate efficiencies through synergies and information sharing, but may also be abused to reduce the number of competitors or—even worse—to facilitate or enforce collusion among them; therefore, it is often regulated. In this paper, we first present results from a survey on the regulation of joint bidding in European public procurement, documenting how the existence and the type of regulation differ across countries, and that—where present—regulation is often related to the ability of an individual firm to be admitted as a solo bidder. Borrowing from the theories of joint bidding in auctions and of horizontal mergers and joint ventures in oligopoly, we then review the basic economics of bidding consortia and the effects that these can have in terms of bidding competition, coordination among firms, risk management, exploitation of other synergies, and entry. Finally, we assess the relative degrees of restrictiveness of several practical criteria that could be used to create consistent regulatory requirements for bidding consortia in public procurement. The only strong conclusion that we can draw is that there is an urgent need for further theoretical and empirical or experimental research on this very important issue for public procurement.
* Head of Research and Development, Italian Public Procurement Agency (Consip).
** Professor of Economics, University of Rome "Tor Vergata", Stockholm Institute of Transition Economies (SITE), and Centre for Economic Policy Research (CEPR). E-mail: giancarlo.spagnolo{at}uniroma2.it.
Procurement consultant, Arthur D. Little S.p.A. E-mail: matteo.zanza{at}gmail.com. The authors wish to thank their colleagues at the Research Unit of Italian Public Procurement Agency (Consip S.p.A) and, especially, B. Cesi, F. Dini, M. Sparro, and R. Zampino. We also received constructive comments from P. Buccirossi and P. Sabbatini.