Unlawful Arrangements and Negotiations in Procurement Law 2026

Definition: Unlawful arrangements and negotiations in procurement law are any informal agreements, preliminary talks or negotiations between the contracting authority and individual bidders that breach the procurement-law prohibition on negotiation, the principle of equal treatment, or the antitrust prohibition on agreements that restrict competition.

Last updated: January 2026 · Legal basis: §§ 97, 124, 298 GWB; § 16 VOB/A; § 57 VgV; § 1 GWB

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What are unlawful arrangements and negotiations?

Unlawful arrangements and negotiations cover a broad spectrum of behaviour that breaches procurement law and that distorts or eliminates competition for a public contract. Procurement law is based on the principle of fair competition and equal treatment of all bidders. Any deviation from this principle – whether through unlawful communication between the contracting authority and individual bidders, or through coordinated behaviour between competing bidders – is prohibited under procurement law and frequently also under antitrust law.

Types of unlawful arrangements

1. Bid rigging (horizontal cartel arrangements)

Bid rigging consists of arrangements between competing companies that are designed to eliminate or distort competition for a public contract. It is prohibited under § 1 GWB (cartel prohibition) and, under § 298 of the German Criminal Code (StGB) (anticompetitive arrangements in invitations to tender), is a criminal offence in Germany.

Typical forms of bid rigging:

• Cover bids: A bidder deliberately submits an inflated bid in order to secure the award for a competitor
• Bid rotation: Bidders agree who will submit the lowest bid for which contract
• Market sharing: Bidders divide territories, customers or types of contract between themselves
• Tender cartels: Coordination of prices and conditions before bid submission

Bid rigging can lead to the exclusion of the bidders concerned from the procurement procedure (§ 124 (1) No. 4 GWB) and entitles the contracting authority to claim damages.

2. Unlawful negotiations in non-negotiated procedures

Procurement law draws a strict distinction between procedures in which negotiations are permitted (negotiated procedure, competitive dialogue) and those in which a strict prohibition on negotiation applies (open procedure, restricted procedure).

In open and restricted procedures, the contracting authority is prohibited from negotiating with bidders on price or other substantive aspects of the bid (§ 15 VgV, § 17 VOB/A). Unlawful negotiations of this kind include:

• Inviting individual bidders to lower their price after submission
• Informal discussions about the content of the bid outside the formal bidder-question channels
• Disclosure of bid content to competitors

3. Unlawful information of individual bidders

The principle of equal treatment prohibits favouring individual bidders with information not available to other bidders. This applies in particular to:

• Advance information on award criteria or evaluation benchmarks that are not in the procurement documents
• Hints about defects in one's own bid that are not given to other bidders
• Disclosure of bid information to competitors

4. Unlawful advance commitments

Unlawful arrangements also include advance commitments where a contracting authority informally assures a particular bidder, before or during the tender, that it will receive the contract. Such assurances have no effect under procurement law and can give rise to damages claims by bidders who are passed over.

Legal consequences of unlawful arrangements

The legal consequences of unlawful arrangements are far-reaching and can hit the procurement procedure and the companies involved hard.

• Exclusion from the procurement procedure: Bidders who are shown to have participated in arrangements can be excluded from the procurement procedure (§ 124 (1) No. 4 GWB)
• Entry in the Competition Register: Final convictions for antitrust arrangements lead to entry in the Competition Register
• Antitrust fines: The Federal Cartel Office can impose fines of up to 10 % of worldwide annual turnover (§ 81 GWB)
• Criminal prosecution: § 298 StGB provides for imprisonment of up to five years or a fine
• Damages: The contracting authority can claim from the participating companies the damages caused by the arrangement (§ 33a GWB)
• Nullity of the contract: A contract concluded on the basis of an unlawful arrangement can be declared null and void

Self-cleaning

Companies that have been involved in unlawful arrangements in the past can, through self-cleaning measures (§ 125 GWB), restore the conditions for renewed participation in competitive procedures. Such measures include full disclosure of the facts, payment of damages and the introduction of effective compliance systems.

FAQ

How can contracting authorities detect bid rigging? Typical indicators are unusual pricing patterns (e.g. evenly spaced prices between bids), identical arithmetic errors in several bids or the withdrawal of bids after the competitors have been disclosed. Contracting authorities should report suspicious patterns to the Federal Cartel Office.

What is the difference between bid rigging and a bidding consortium? A bidding consortium is a permissible cooperation between companies who jointly submit a bid. Bid rigging is unlawful coordination between bidders who are nominally competitors and who submit separate bids.

Can bidders report an ongoing arrangement to the Cartel Office? Yes. The Federal Cartel Office operates a leniency programme under which cartel members who are first to disclose the arrangement and cooperate can be exempted from fines.

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