Bidding Ring

  

A group of people working together to keep the prices artificially low (or artificially high, depending on the scenario) by agreeing not to outbid each other. It's a form of collusion that's generally considered fraud.

Say a construction contract is up for bid. You and your buddy are the main competition for the project. But instead of putting in truly competitive bids, you guys get together and decide that you're going to put in the same amount. This way, whichever one of you gets the final bid, that person is going to make more than if the bidding was fair.

In this example, you and your friend are the bidding ring, and what you've just conspired to do is called bid rigging (See: Bid Rigging). We expect you to go to your room and think about what you've hypothetically done.

Related or Semi-related Video

Finance: What are Kickbacks?1 Views

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Finance allah shmoop What are kickbacks He okay Okay It's

00:08

Not that it's This dark worf at midnight A car

00:14

with no place The nervous guy in the suit He's

00:16

thie it or information technology Head buyer for the bank

00:21

shmoop nar go he's the decision maker on buying three

00:25

billion dollars worth of database software And then there's this

00:29

guy just out of the car He's the head of

00:31

sales of del fi databases are us He'll make a

00:34

three percent or ten million dollar commission on this ten

00:37

year contract If it goes through all it takes is

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this little bit of wd forty to make the wheels

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turn a briefcase full of one hundred grand in unmarked

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bills Yeah That's the grease this dough to the buyer

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It's a kickback and it's an obvious one In real

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life kickbacks are way more insidious secretive clever head of

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sales of del fi owns a beach house in the

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hamptons Maybe he you know lets his buyers stay there

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on weekends And maybe he provides them with well all

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kinds of recreation You can let your mind wander So

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sound like a ludlum me kind of ah spy novel

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With corporate intrigue well guess what This happens all the

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time that's happened a big companies and little hewlett packard

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and oracle and others they've all come down with sales

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People being nailed exacts being fired and businesses well continuing

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to practice this practice more or less The big problem

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Foreign markets yeah there they do kick back so just

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kind of a regular part of doing business So if

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we're trying to play by our rules in america and

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imposing them on some small struggling nation where the people

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are desperate to simply make enough money to feed their

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children wealth and how we think about the morality of

01:51

kickbacks we know this guy's position on the matter We

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should remember that from inside the jail bars when we're 00:01:57.722 --> [endTime] nailed

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