Cartels and Bid Rigging: Detection, Evidence and Liability in Mongolia

1) What evidence do antitrust authorities use to prove a cartel if there is no written agreement?

In Mongolia, even with few court precedents, the antitrust authority (Anti-Monopoly Agency of Mongolia) can prove a cartel without a written agreement or where it is hidden under another contract. They may use indirect evidence such as parallel pricing, unusual price stability, market or customer allocation, and suspicious bidding patterns (e.g., bid rotation, cover bidding). Direct evidence may include emails, messages, call records, group chats, and audio or video files showing coordination between competitors. In evaluating this material, authorities may also apply international notions supported by economic analysis and professional legal theory.

2) How do competition authorities detect bid rigging in public and private tenders?

Bid‑rigging in Mongolia is a serious violation, so the Anti-Monopoly Agency looks for suspicious bidding patterns, such as bid rotation, cover bidding, bid suppression, and identical prices. They may also examine relationships between bidders, including ownership, directors, and other affiliations, and compare these patterns with tender documents. Public tenders are easier to check because data is centralized, while private tenders are often triggered by complaints or whistleblowers. 

3) Which types of information exchange between competitors may constitute an antitrust violation?

Under Articles 11 and 12 of the Law on Competition of Mongolia, information exchange between competitors is unlawful when it reduces independent competition and facilitates coordination. This includes:

• sharing current or future prices, discounts, pricing strategies, or other commercially sensitive information that may lead to price-fixing.
• exchanging information on customers, territories, production or supply plans, and investment strategies that could result in market sharing or output restrictions.
• sharing tender related information, such as bid prices, participation, or winning arrangements, may constitute bid rigging.
• information exchanges that facilitate collective boycotts or exclude competitors from the market may also violate the law.

4) What types of interactions with competitors are permissible under antitrust laws, and where is the line drawn between legitimate cooperation and unlawful coordination of competitive conduct?

Competitors are allowed to interact when their cooperation does not interfere with independent competition. This includes legitimate activities such as joint ventures, research and development projects, setting technical standards, and sharing general or historical market information. They may also discuss broad industry issues like regulation, safety, or policy in trade associations. In all these cases, the important rule is that companies must not exchange sensitive strategic information such as prices, customers, output levels, or bidding plans.

The line is crossed when interaction leads to coordination of competitive behavior. Per Article 11 of the Law on Competition of Mongolia, it is illegal for competitors to agree on or exchange information about prices, market division, production limits, or tender bids. Even informal agreements or understandings can be considered illegal if they influence how companies compete in the market.

5) What are the most common red flags indicating possible bid rigging?

According to Article 11.1.4 of the Law on Competition of Mongolia, bid rigging is prohibited in public procurement, auctions, and competitive bidding. Common red flags include identical or unusually similar bid prices, bid rotation, market or customer allocation, and competitors taking turns winning contracts. Other warning signs include cover bids, unexplained withdrawal of bids, identical errors or formatting in bid documents, and shared addresses, personnel, or subcontractors. Frequent communication or coordination between competitors before a tender may also indicate collusion. These indicators may be used by the Anti-Monopoly Agency as evidence of a prohibited cartel or concerted practice. 

6) What liability may a company and its executives face for participation in a cartel or bid-rigging arrangement?

According to Mongolian laws, anti-competitive behavior is treated at two different levels: administrative violations and criminal offenses.

At the administrative level, Article 10.7 of the Law on Violations covers cartel behavior and unfair competition. This includes actions like fixing prices, dividing markets, rigging bids, limiting production or supply, spreading false information, and abusing a dominant position. Companies that engage in these practices can face serious financial penalties, including fines of up to 6% of the preceding year’s annual sales revenue derived from the relevant goods, confiscation of illegal profits, and additional sanctions.

If such conduct constitutes a criminal offence, criminal liability shall be imposed in accordance with Article 18.1 of the Criminal Code. This applies when dominant companies manipulate markets by creating artificial shortages, charging unjustifiably high prices, blocking competitors, or creating price gouging and artificial shortages of goods during disasters, epidemics, or other hazardous situations. Criminal penalties can include fines of USD 130-7600 for individuals and USD 2800-22400 for legal entities (if the offense is committed on behalf of legal entities), community service, or restrictions on movement for up to one year.

7) Could participation in industry associations, working groups, or market information exchange forums give rise to antitrust risks?

Yes. Participation in industry associations, working groups, or market information exchange forums can create antitrust risks because these settings bring competitors together and increase the chance of coordinated behavior.

While such forums are often legitimate and useful, the risk arises when competitors exchange sensitive information or align their conduct in the market. Discussions about future prices, discounts, customer allocation, bidding strategies, production levels, or capacity can be treated as unlawful coordination under competition law. Even informal or indirect exchanges may be enough to raise concerns if they reduce uncertainty between competitors.

Industry cooperation is not illegal, but it must be carefully controlled. Once discussions move from general information sharing to sensitive competitive data, antitrust risk becomes significant. 

8) What should a company do if it discovers potential cartel conduct during an internal audit or investigation?

If a company discovers potential cartel conduct, the main principle should immediately stop suspected conduct, preserve all relevant evidence, and seek legal advice. It should conduct an internal investigation to determine the facts, identify those involved, and assess any ongoing risks. Where appropriate, the company should consider self-reporting or cooperating with the Anti-Monopoly Agency, as early cooperation may reduce penalties.

Finally, the company should strengthen its competition compliance program to prevent future violations.

9) Are there any leniency or cooperation programs that allow companies to reduce or avoid penalties?

Yes. Under Article 11.4 of the Law on Competition of Mongolia, a person who provides credible information and evidence of a cartel may receive a reward equal to 5% of the fine imposed by the Anti-Monopoly Agency.

In serious cases involving criminal offences, cooperation with the authorities may be considered a mitigating factor under the Criminal Code.

10) What elements should an effective antitrust compliance program include to minimize cartel risks?

In Mongolia, an effective competition compliance program should start with a policy that is formally approved and fully supported at top management level, and that is consistent with the Law on Competition of Mongolia but further clarified and made more sophisticated. It has been emphasized, by specialists that Mongolia needs legal and regulatory upgrades to modernize cartel investigation processes and tools. These reforms should draw on international best practices while being carefully adapted to Mongolia’s business and economic environment and the specific features of domestic undertakings. 

Author: Kherlenchimeg Soyolkhuu