The Commerce Commission has put a number on something the construction and infrastructure sectors have muttered about for years. Bid-rigging in public procurement is costing taxpayers an estimated $360 million to $650 million a year, and the conservative figure is the headline one. It is the first time the Commission has produced this calculation.
The message from Commission chair Dr John Small could not be blunter. “I have a message for those involved in this illegal activity, we’re coming for you,” he says.
A hidden levy on $51.5 billion of spending
Government agencies spend roughly $51.5 billion a year buying goods and services. At the low end, collusion is skimming about 0.7% off the top of that. At the high end it is closer to 1.3%. Either way, it is a quiet tax levied by insiders on every ratepayer and taxpayer in the country, at a time when ministers are demanding value for money from every department.
Bid-rigging is simple in concept. Bidders agree in advance who should win a tender. The losers either sit out, lodge deliberately uncompetitive bids, or coordinate on price to protect the chosen winner. The client thinks it has run a competitive process. It has not.
The honest bidder is the real victim
Most coverage treats this as a regulatory warning story. It is also a market story, and a pro-business one. Every rigged tender is a contract an honest firm never had a real chance of winning. Collusion suppresses the win rates of legitimate contractors, keeps newcomers out and hands margin to whoever is in the club.
This is not an argument against outsourcing or private delivery of public works. It is the opposite. Competitive tendering only delivers value when the competition is real. Enforcing competition law against cartels protects free enterprise from the people abusing it.
Your rivals are more likely to talk than ever
The real shift is in the odds of getting caught. Anonymous reporting to the Commission has grown roughly 30% year on year for two years, with 34 anonymous reports in the latest 12 months, and New Zealand’s leniency application rate now almost matches that of the United States.
That matters because cartels depend on trust between competitors, and the leniency programme is designed to destroy it. The first party to confess gets the best deal. The Commission says its reporting tool and leniency regime are producing “very strong leads”, with active procurement investigations already underway. It also plans to strengthen its immunity programme to better protect whistleblowers, with details promised in coming months.
None of this arrived out of nowhere. The Commission’s 2026-27 enforcement priorities, released in July, named cartel conduct, including bid-rigging, as a key target. September’s number is the follow-through.
The stakes are now criminal
Since April 2021, cartel conduct has been a crime, carrying up to seven years in prison for individuals and fines of up to $10 million for companies. Directors can also be banned from managing companies.
The first criminal case has already run its course. Director Munesh Kumar was sentenced in December 2024 to six months community detention and 200 hours community work, and his company MaxBuild was fined $500,000 for rigging bids on NZTA and Auckland Transport roading work. In 2025, the Commission reported a second firm was fined $595,000, later cut to $30,000 because it could not pay.
The telling detail is how that case began. The investigation only started in April 2022 after a spreadsheet of pricing information was accidentally sent to NZTA. Routine procurement did not catch it. A mistake did. That is precisely why the Commission is leaning so hard on insiders to come forward.
Construction is first in the firing line
Construction and infrastructure are “a particular focus” given past violations. Small says the public sector is especially exposed because of frequent repeat contracting and large projects with big money at stake. But the crackdown is wider than roading. The Commission is also pursuing cartel cases in real estate and grocery, after concluding courier-sector cases last year.
“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,” Small says.
What bidders should do now
For any firm chasing public work, the practical response is straightforward. Review how your team prices tenders and who they talk to while doing it. Shut down informal pricing chats with competitors, including at industry events and on joint-venture or subcontracting discussions. Make sure staff know that a casual “you take this one” is now potentially a jail offence, not a handshake.
For the honest majority, the upside is real. If enforcement bites, a slice of that $360 million starts flowing back to taxpayers and to the firms that bid straight. The next test is whether the Commission converts its “very strong leads” into prosecutions. When the first post-announcement charges land, the industry will know it was not bluffing.
Sources
- 1News: Cartels ‘cheating’ taxpayers out of $360 million a year – ComCom (2026-09-27)
- Scoop: ‘We’re Coming For You’: ComCom Estimates Bid-Rigging In Public Procurement Costing Kiwi Taxpayers $360 Million A Year (2026-09-27)
- diary.nz: ‘We’re Coming For You’: ComCom Estimates Bid-Rigging In Public Procurement Costing Kiwi Taxpayers $360 Million A Year (2026-09-27)
- Vesper News: Commerce Commission cracks down on cartels in public procurement (2026-09-27)
- Newstalk ZB: Commerce Commission puts a target on bid rigging behaviour (2026-09-28)
- Commerce Commission: Enforcement and Compliance Priorities 2026-27 (2026-07-22)
- Commerce Commission: Cheating the System – Bid-rigging of Roading Contracts Sees Firm Fined (2025-10-23)
Join the discussion
Add useful context, ask a good question, or challenge an idea — keep it specific and respectful.