The Bar Association’s latest "double-track" proposal is a textbook example of legal overreach masquerading as market protection. They want to stack criminal sanctions on top of administrative fines, hoping to scare companies into honesty. It sounds noble. It sounds tough. It is fundamentally broken.
By pushing for jail time and heavy-handed prosecution, we aren't cleaning up the market. We are erecting a barrier to entry so high that only the incumbents can survive it. We are trading market dynamism for a sterilized, terrified, and ultimately stagnant economy.
The Myth of the Deterrent Effect
The central pillar of the "double-track" argument is that administrative fines are just a "cost of doing business." The logic follows that if you put an executive in a cell, the board of directors will suddenly find religion.
This is a fantasy.
In reality, criminalization creates a "defensive compliance" culture. When the stakes move from a line-item fine to a prison sentence, companies stop innovating on deal structures. They stop talking to partners. They stop taking risks. The result? A rigid market where everyone is too afraid to step near the gray areas that often drive competitive pricing.
Furthermore, the burden of proof in criminal cases—beyond a reasonable doubt—is a massive hurdle. We are about to sink millions of taxpayer dollars into decade-long litigations that will likely result in "not guilty" verdicts because the line between "strategic partnership" and "collusion" is thinner than a sheet of legal paper.
Small Players Get Crushed, Titans Get Lawyers
If you think criminalizing bid-rigging hurts the giants, you haven't been paying attention. A multinational corporation has a literal army of compliance officers and white-collar defense attorneys. They can navigate a double-track system because they have the capital to build a fortress of paperwork.
Now, look at the mid-sized contractor trying to break into a new sector. Under this proposed regime, one informal lunch or a misinterpreted email becomes a literal existential threat. The risk isn't just a fine; it’s handcuffs.
Faced with that risk, the smart mid-sized player simply stays home. They don’t bid. They don’t challenge the status quo. The "incumbent's club" becomes a permanent fixture because the legal risk of challenging them is too high for anyone without a billion-dollar balance sheet. We are effectively handing a monopoly to whoever is already at the top.
The Efficiency of the "Gray Zone"
Let’s be honest about something no Bar Association member will admit: some level of communication between competitors is actually efficient.
In complex infrastructure or tech projects, "co-opetition" is the only way things get built. Subcontracting often requires discussing price points and capacities. When you introduce a "double-track" criminal system, you create a chilling effect on these necessary interactions.
Imagine a scenario where two firms want to joint-bid on a project neither can handle alone. Under a strict criminal regime, the fear that their preliminary discussions could be framed as "bid-rigging" by an overzealous prosecutor prevents the partnership. The project either goes to a foreign giant or doesn't get built at all.
The False Promise of Leniency Programs
The Bar Association loves to talk about "Leniency Programs"—the idea that the first person to snitch gets a pass. They claim this creates a "Prisoner’s Dilemma" that breaks up cartels.
In practice, this turns the legal system into a race to the bottom. It rewards the most sophisticated bad actor—the one who knows exactly when to flip—while punishing the smaller participants who might not even realize they were crossing a line. It creates a market built on paranoia rather than performance.
Stop Regulating and Start Designing
If you want to stop bid-rigging, you don’t need more police. You need better auction design.
The obsession with "punishing" the bidders ignores the fact that most rigged bids are the result of poorly structured procurement processes. If a government tender is written so specifically that only two companies can meet the specs, you have invited collusion.
Instead of building new prisons, we should be hiring game theorists. We need to move toward:
- Blind Bidding Systems: Where competitors have zero visibility into who else is at the table.
- Dynamic Auction Formats: That make it mathematically impossible to signal prices without losing the contract.
- Outcome-Based Tendering: Where the focus is on the result, not the line-item costs that are so easy to manipulate.
The High Cost of "Justice"
Every hour a prosecutor spends trying to prove a bid-rigging conspiracy is an hour not spent on actual violent crime or systemic fraud. The Bar Association’s proposal is a jobs program for lawyers, plain and simple.
We are told that "trust in the market" requires these hammers. I argue that a market based on fear is not a free market. It is a managed utility. If we continue down this path, we will find ourselves with "perfectly legal" markets that are completely devoid of life, where the prices are high not because of cartels, but because the cost of legal compliance has replaced the cost of competition.
The solution isn't to double the tracks; it's to simplify the race.
Burn the compliance manuals. Fire the game-theory-deficient procurement officers. If a bid is rigged, it’s because the buyer was lazy enough to let it happen. Fix the auction, and the "criminals" will have no choice but to compete.
Stop trying to litigate your way to a fair market. You can't.
