Sham Bid in Procurement Law 2026 – Collusion and Competition Law

A sham bid is a manipulated tender in public procurement that simulates competition. Definition, legal consequences and prevention.

Definition: A sham bid is a tender deliberately submitted at an inflated price or on unfavourable terms as part of a bid-rigging arrangement, intended to secure the contract for a specific competitor while creating the outward appearance of genuine competition.

Last updated: January 2026 · Legal basis: § 298 StGB (Germany); § 168b StGB (Austria); Art. 101 TFEU; § 124(1) no. 4 GWB

What is a sham bid?

Sham bids are at the heart of bid-rigging cartels: they create the appearance of competition where none actually exists. Cartel members agree on which bidder is to receive the contract (the so-called "winner"), and the remaining members deliberately submit overpriced or otherwise inferior tenders to secure the award for the chosen bidder. The contracting authority believes that it has run a competitive procedure, but in reality pays an inflated price determined by the cartel.

Legal consequences

Sham bids are punishable under criminal law, prohibited by competition law and a ground for exclusion from the procurement procedure.

Criminal law

Germany: § 298 StGB (Anti-Competitive Agreements in Tendering) penalises participation in bid-rigging arrangements with imprisonment of up to five years or a fine.
Austria: § 168b StGB (Anti-Competitive Agreements in Procurement Procedures) provides for comparable penalties.

Competition law

Bid-rigging arrangements breach the cartel prohibition under Art. 101 TFEU and national cartel prohibitions (§ 1 GWB; § 1 KartG). Competition authorities can impose substantial fines.

Exclusion under procurement law

Under § 124(1) no. 4 GWB (Germany), a bidder that has entered into agreements with other undertakings which distort competition may be excluded from the procurement procedure. In Austria, § 78(1) no. 7 BVergG 2018 applies.

Detecting sham bids

Contracting authorities can spot indications of sham bids when pricing structures and tender content show unusual patterns.

Typical indicators:

Bids cluster suspiciously close together or at regular intervals
Calculation formulas or errors appear identically across several bids
Letterheads or formatting look suspiciously similar
Certain bidders regularly participate without ever winning a contract
Prices are systematically above the market level

Prevention by contracting authorities

Contracting authorities can reduce the risk of sham bids through structural measures. These include: electronic tender submission with mandatory signatures, statistical analysis of tenders, reporting of suspected cases to competition authorities, and the inclusion of self-cleaning clauses in the contract documents.

Related terms

FAQ

Can a bidder who has submitted a sham bid still self-clean? Yes. Self-cleaning under § 125 GWB is also available in bid-rigging cases, provided the bidder has actively cooperated in the investigation, dismissed the responsible staff and put compliance systems in place.

What can the contracting authority do if it suspects sham bids? It should notify a competition authority, where appropriate exclude all bids and re-run the tender. Damages claims against the cartel members are also possible.

Last updated: January 2026 All information without guarantee. For legally binding advice, please consult a law firm specialising in procurement law.