Bid-rigging in New Zealand public procurement is costing taxpayers an estimated NZ$360 million a year, according to the Commerce Commission, which said it had investigations underway involving public contracts.
The government agency said reports through its anonymous reporting tool and applications to its cartel leniency program were generating “very strong leads.”
The $360 million cost estimate is based on annual government procurement spending of about NZ$51.5 billion.
In a technical note, the Commission assumed bid-rigging affected 3.5 percent of that spending and increased prices on affected contracts by 20 percent.
Ultimately, it put the possible annual cost at between NZ$150 million to NZ$640 million, reflecting uncertainty about how often collusion occurs and its effect on prices.
The estimate covers price increases but excludes potential losses from poorer quality goods and services or reduced innovation.
The Commission said bid-rigging is difficult to measure because cartels operate in secret.
However, its note applied an estimated prevalence range of two to five percent across public procurement rather than calculating separate figures for individual industries.
It also pointed to the size and recurring nature of government contracts as factors that can make public tenders attractive targets for collusion.
Commission chair Dr John Small warned businesses engaged in the practice, “we’re coming for you.”
“Cartels in public procurement are a specific enforcement priority for the Commission – we take an extremely dim view of any illegal activity that rips off taxpayers,” he said.
Bid-rigging occurs when suppliers agree who should win a tender instead of competing independently.
This can involve a supplier declining to bid, competitors coordinating their prices or a bidder submitting an inflated offer to improve another firm’s chances.
The result can be a tender that appears competitive while giving the buyer little chance of securing the best available price.
“Ultimately, when this illegal conduct occurs, all Kiwis pay,” said Dr Small.
“It is essential we protect the integrity of processes involving the expenditure of public funds.”
Alongside its investigations, the regulator said it was continuing education and outreach for businesses and procurement teams.
The warning follows New Zealand’s first criminal cartel prosecution, which involved rigged bids for public roading work.
The case concluded in October 2025 with the sentencing of a second company, which was fined NZ$30,000. The court had considered a NZ$595,000 fine appropriate but reduced it because the company couldn’t afford to pay.
Construction firm MaxBuild had previously been fined NZ$500,000, while its director, Munesh Kumar, received six months’ community detention and 200 hours of community work.
The Commission’s investigation began after a spreadsheet containing tender pricing information was inadvertently sent to a team overseeing one of the roading projects.
Cartel conduct can carry a prison sentence of up to seven years in New Zealand.
