What does the term 'bid rigging' refer to?

The term 'bid rigging' refers to an illegal arrangement among bidders to manipulate auction outcomes. In this context, it occurs when competing bidders collude to set prices, allocate specific lots among themselves, or otherwise coordinate their bids to ensure that the auction’s results are predetermined or skewed in favor of certain participants. This practice undermines the integrity of the bidding process, as it restricts true competition and can lead to artificially inflated prices that do not reflect the actual market value of the auction items.

Understanding this concept is crucial, particularly in industries where auctions are common, as bid rigging can result in legal consequences for those involved and can significantly harm the interests of non-colluding bidders and sellers. The promotion of fair and open auction practices is essential for maintaining market transparency and integrity, highlighting the significance of recognizing and preventing such illicit activities.