What is 'Bid Rigging'

Bid rigging is a scheme in which businesses collude so that a competing business can secure a contract for goods or services at a pre-determined price. Bid rigging stifles free-market competition, as the rigged price will be unfairly high. The Sherman Act of 1890 makes bid rigging illegal under U.S. antitrust law. Bid rigging is a felony punishable by fines, imprisonment or both.


There are four main types of bid rigging: bid suppression, complementary bidding, bid rotation and subcontracting. In the most common of these schemes, complementary bidding, some of the "competitors" submit offers that they know the buyer will reject because the price is too high or the terms are unacceptable in order to create the appearance of legitimate bidding while ensuring that a prearranged "competitor" will win the bid.

  1. Bid Tick

    An indication of whether the latest bid price is higher, lower ...
  2. Best Bid

    The highest quoted bid for a particular trading instrument among ...
  3. Bid Size

    The number of shares being offered for purchase at a specified ...
  4. Hit The Bid

    Hit the bid is a buzzword used to describe an event where a broker ...
  5. Bid Whacker

    A slang term for an investor who sells shares at or below the ...
  6. Unsolicited Bid

    An offer made by an individual, company or group of investors ...
Related Articles
  1. Investing

    How To Create A Real Estate Bidding War

    There are still many areas in the United States that are attractive enough to buyers that you can start a good, old-fashioned bidding war on your property.
  2. Insights

    Oil Rigs Fall for First Time in 4 Months (BHI)

    Baker Hughes says the number of oil rigs operating in the US has fallen for the first time in four months.
  3. Investing

    How To Read A T-Bill Quote

    If you want buy and sell US Treasury bills, you need to learn to read the quotes.
  4. Investing

    Unilever Asks UK Govt. for ‘Level Playing Field’

    The company wants to extend the time allowed for takeover targets to defend themselves.
  5. Investing

    Understanding Gold Quote Prices

    Willing to trade gold but puzzled by gold price quotes and terminology? Investopedia explains how to read gold price quotes.
  6. Small Business

    Risks Associated With Government Contracts

    Government contracts can be rewarding, but they also come with a variety of risks.
  7. Insights

    Noble Outlines Worldwide Plans for Investors (NE)

    Noble Corp. recently hosted a call with investors that outlined the company's current operations and plans for expansion in 2017.
  8. Investing

    Oil Starting Week Strong

    Oil ETFs are set to open higher thanks to market enthusiasm for the commodity.
  1. Why are the bid prices of T-bills higher than the ask prices? Aren't bids supposed ...

    Yes, you are correct that the ask price of a security should typically be higher than the bid price. This is because people ... Read Answer >>
  2. How do average costs compare among various oil drilling rigs?

    Learn the average costs to an oil producer for purchasing either land-based or offshore oil-drilling rigs and some factors ... Read Answer >>
  3. How do day traders capture profits from the difference between bid and ask prices?

    Discover how day traders capture profits from the difference between bid and ask spreads. These spreads blow out during volatile ... Read Answer >>
  4. What is the difference between a quote driven market and an order driven one?

    The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Answer >>
  5. How quickly can an oil and gas producer react to changing oil prices?

    Learn how oil and gas producers are able to quickly respond to changes in crude oil prices, and understand how the weekly ... Read Answer >>
  6. Why are the bid and ask quotes usually so far away from each other in after-hours ...

    After-hours trading is defined as the exchange of securities outside of an exchange's specified regular trading hours (usually ... Read Answer >>
Hot Definitions
  1. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  2. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  3. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  4. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  5. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  6. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
Trading Center