Affiliated Company Bidding and Bid Rigging: Lessons from a Not-Guilty Verdict
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※ Special Disclaimer: This article is adapted from Criminal Judgment No. 193 (2026) of the Taiwan New Taipei District Court, which is publicly available judicial information. This case was not handled by Chien Sheng International Law Firm. For the purpose of promoting legal knowledge regarding government procurement, our firm provides an objective analysis of the key legal issues addressed in the judgment. Information identifying the parties and government agencies involved has been anonymized.
When participating in government procurement projects, some businesses may invite affiliated companies or friendly businesses to submit bids in order to avoid a failed tender caused by having fewer than the legally required number of bidders.
However, such arrangements can easily attract the attention of prosecutors and investigators and may even lead to allegations of bid rigging.
Does simultaneous bidding by affiliated companies necessarily constitute a criminal offense? When prosecutors allege fraudulent bidding, what evidentiary threshold must they meet?
Through a recent not-guilty judgment issued by the New Taipei District Court, this article examines the legal boundaries of fraudulent bidding under Taiwan’s Government Procurement Act.
1. Case Background and the Prosecution’s Allegations
The case arose from a procurement project for road improvements within the premises of a power plant.
According to the indictment, a procurement employee of Company A sought to ensure that the company would successfully obtain the contract and to prevent the tender from failing due to an insufficient number of bidders. The employee therefore approached the person in charge of Company B.
The prosecution alleged that both parties knew Company B had no genuine intention to compete for the contract. Nevertheless, the employee of Company A allegedly obtained Company B’s corporate seals and used them to prepare Company B’s bidding documents. The bids of both companies were then allegedly submitted to the procuring agency on the same day.
Company A ultimately won the contract.
However, prosecutors argued that Companies A and B were not genuine competitors. According to the prosecution, the defendants deliberately created the false appearance that three or more independent businesses were competing for the procurement project, thereby causing the procuring agency to mistakenly proceed with the opening of bids.
The prosecution therefore charged the procurement employee of Company A and the person in charge of Company B under Article 87, Paragraph 3 of Taiwan’s Government Procurement Act, which criminalizes the use of fraudulent means to cause an incorrect result in the opening of bids.
2. Court’s View: How Is Fraudulent Bid Rigging Defined?
Faced with the prosecution’s allegations, the court first examined the legislative purpose of the Government Procurement Act and the legal meaning of “fraudulent means.”
The court explained that the Government Procurement Act is intended to establish a fair and transparent procurement process and ensure that government procurement operates through genuine market competition.
Accordingly, even where participating bidders are affiliated companies under corporate law, or have an upstream-downstream business relationship, this does not necessarily constitute fraudulent bidding.
If each company participates in the tender under its own name for the purpose of maximizing its own commercial interests and independently determines its bid price, genuine market competition may still exist. Under such circumstances, their participation cannot automatically be characterized as the use of fraudulent means.
Conversely, the situation is different where multiple bidders are actually controlled and directed by the same person.
For example, if one person determines the bids of several participating companies and deliberately arranges for one company to submit a slightly higher price than another, the bids may the appearance of price competition even though no genuine competition exists.
Where such conduct undermines the competitive pricing mechanism and causes the procuring agency to mistakenly believe that genuine competition exists, it may constitute fraudulent bid rigging under Article 87, Paragraph 3 of the Government Procurement Act.
Court’s View II: Strict Rules of Evidence and the Principle of In Dubio Pro Reo
Once the applicable legal standard had been established, the key question became whether the prosecution had sufficient evidence to prove that Company A’s employee had actually exercised substantive control over Company B’s bidding process.
After reviewing the evidence, the court identified several significant evidentiary gaps.
The court relied on Article 154, Paragraph 2 of Taiwan’s Code of Criminal Procedure, which provides that criminal facts must be established by evidence and that no criminal fact may be established without evidence, as well as Article 301, Paragraph 1, concerning the rendering of a not-guilty judgment when an offense cannot be proven.
➙ First, with respect to the documentary evidence, the court compared the bidding documents submitted by Companies A and B.
The handwriting appearing on the two sets of documents did not show any significant similarity. This directly weakened the prosecution’s allegation that Company A’s employee had prepared both companies’ bidding documents.
➙ Second, witness testimony and other evidence indicated that Company B’s bidding affairs had actually been handled by another employee, surnamed Wang, who had since passed away.
The evidence suggested that Wang exercised considerable authority within Company B. In fact, some individuals who had business dealings with the company mistakenly believed that Wang was its actual owner.
Under these circumstances, the court concluded that it could not rule out the reasonable possibility that Wang had independently decided to participate in the tender and prepared the bidding documents without the knowledge of Company B’s nominal responsible person.
★ More importantly, because Wang had already passed away, the court could no longer determine whether he genuinely intended to compete on behalf of Company B or whether he had coordinated with Company A to submit a sham bid.
Because the truth could not be conclusively established, the court applied the important criminal-law principle of in dubio pro reo—when reasonable doubt remains, the doubt must be resolved in favor of the defendant.
The court therefore held that it could not simply draw an adverse inference against the defendants in the absence of sufficient evidence.
Court’s View III: The Alleged Criminal Motive Was Inconsistent with the Objective Circumstances
In addition to the weaknesses in the evidence, the court examined the objective circumstances surrounding the tender and found significant problems with the prosecution’s theory of motive.
The prosecution alleged that Company A’s employee personally carried and submitted the bids of both Companies A and B.
The court questioned this allegation. If the same person had indeed simultaneously submitted bids on behalf of two different companies, such conduct could have immediately raised concerns regarding the fairness of the tender. Yet there was no indication that the personnel responsible for receiving the bids raised an objection or reported the matter at the time.
This cast further doubt on the allegation that both bids had been submitted together.
More importantly, after reviewing the procurement records, the court discovered that two other companies had already submitted their bids on the day before Company A submitted its bid.
This fact was critical.
Once Company A submitted its own bid, the tender would already have satisfied the statutory threshold of three bidders required for the opening of bids.
Therefore, there was little apparent reason for Company A to assume the substantial criminal risk of arranging an additional sham bid in Company B’s name merely to increase the number of participating bidders.
This inconsistency substantially weakened the prosecution’s theory regarding the defendants’ alleged criminal motive.
3. Conclusion: Criminal Charges Must Be Supported by Evidence
Based on the foregoing analysis, the court concluded that the evidence presented by the prosecution was insufficient to establish guilt beyond a reasonable doubt.
There was no affirmative evidence proving that Company A’s employee had exercised substantive control over Company B’s bidding process, and the prosecution’s theory regarding the defendants’ criminal motive was inconsistent with important objective facts.
The court therefore rendered not-guilty verdicts for both defendants.
This judgment illustrates a fundamental principle of criminal procedure: a criminal conviction must be based on evidence, not speculation or assumptions.
Government procurement cases often involve complicated corporate relationships, commercial practices, bidding procedures, and strict rules of criminal evidence. When a company or individual faces an investigation or prosecution, identifying favorable evidence within a complex case record and exposing gaps or inconsistencies in the prosecution’s theory can be crucial to the outcome of the case.
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