謙聖國際法律事務所

1. Taiwan Government Procurement Bid-Rigging Case Overview

1.1 Background of the Public Procurement Tender

The case arose from a wastewater tank cleaning procurement project conducted by a state-owned enterprise in Taiwan.

The owner of Company A, referred to here as Mr. Chen, initially considered participating in the tender because the project appeared commercially profitable. However, a locally influential individual, referred to as Mr. Hei, learned about the company's interest in the project. Mr. Hei allegedly exercised considerable influence around the facility and described himself as its unofficial manager.

Through an intermediary, Mr. Hei arranged a meeting with Mr. Chen at an establishment offering alcoholic beverages and hostess services. Following the meeting, Company A did not submit a bid.

1.2 Prosecutors' Allegations and the First-Instance Conviction

Investigators had been monitoring Mr. Hei's communications and obtained information about the meeting.

Prosecutors argued that Mr. Chen had accepted hospitality and reached an agreement not to compete for the procurement contract. They charged Mr. Chen and Company A in connection with collusive bidding under Article 87, Paragraph 4 of the Government Procurement Act.

The first-instance court convicted Mr. Chen. He appealed, arguing that his withdrawal resulted from intimidation rather than a voluntary agreement to restrict competition. The Taiwan High Court, Kaohsiung Branch, subsequently examined the evidence and reached a different conclusion.

2. What Constitutes Collusive Bidding Under Taiwan's Government Procurement Act?

2.1 Legal Requirements Under Article 87, Paragraph 4

Article 87, Paragraph 4 of Taiwan's Government Procurement Act criminalizes agreements intended to influence contract award prices or obtain improper benefits by causing a supplier not to submit a bid or not to compete on price. The statutory penalty is imprisonment of six months to five years, subject to the applicable provisions.

⚠️A central element of this offense is the existence of an agreement restricting genuine competition.

Prosecutors must establish the required intent and conduct through admissible evidence. The fact that a supplier ultimately decides not to bid does not, by itself, prove that an unlawful agreement existed.

2.2 Voluntary Agreement Versus Withdrawal Under Coercion

The distinction between voluntary bid coordination and forced withdrawal is critical.

Collusive bidding may occur when parties intentionally coordinate their conduct to suppress competition, influence tender prices, or obtain improper advantages. By contrast, a contractor who withdraws because of credible threats may be acting to protect personal safety rather than participating in an unlawful bidding arrangement.

Although an agreement does not always require equal bargaining power, criminal liability under Article 87, Paragraph 4 still requires proof of the statutory agreement and the relevant criminal intent. A meeting, hospitality, or subsequent withdrawal cannot replace evidence establishing those elements.

3. Key Evidence Examined by the Taiwan High Court

3.1 Wiretap Records Revealing Threats of Violence

The appellate court examined intercepted telephone conversations involving Mr. Hei and other individuals. The communications revealed that Mr. Hei had expressed an intention to use violence if Mr. Chen participated in the tender. Statements included threats that Mr. Chen would be beaten or killed if he proceeded with the bid.

These recordings were significant because they indicated that Mr. Hei intended to intimidate a potential competitor rather than engage in ordinary commercial negotiations. The evidence also supported Mr. Chen's explanation that his decision not to bid was motivated by fear.

3.2 Witness Testimony About the Intimidating Meeting

The High Court also considered testimony from witnesses who attended the meeting.

According to the testimony, Mr. Hei behaved aggressively, emphasized his local influence, and appeared with associates who reinforced the threatening atmosphere. One associate reportedly made intimidating remarks, while another recorded the meeting using a mobile phone.

Mr. Hei allegedly warned Mr. Chen that even if he won the tender, he would face serious consequences and should withdraw.

🧑🏻‍⚖️The court considered these circumstances when assessing whether Mr. Chen had voluntarily entered into a bid-rigging agreement or had instead submitted to intimidation.

4. Why Did the High Court Overturn the Bid-Rigging Conviction?

4.1 Failure to Prove Criminal Intent and Agreement

The prosecution relied substantially on two facts: Mr. Chen attended the meeting, and Company A subsequently did not participate in the tender. However, the appellate court found that these circumstances were insufficient to establish an unlawful bid-rigging agreement.

The intercepted communications and witness testimony instead supported the conclusion that Mr. Chen had faced serious threats. The prosecution had not adequately established that Mr. Chen intended to obtain an improper benefit or voluntarily agreed to restrict competition.

➠Accordingly, the High Court overturned the first-instance conviction and acquitted Mr. Chen and Company A.

4.2 Presumption of Innocence and Criminal Evidence Standards

Article 154, Paragraph 2 of Taiwan's Code of Criminal Procedure provides that criminal facts must be established through evidence and cannot be presumed without proof. Article 301, Paragraph 1 further requires an acquittal when the defendant's guilt cannot be established.

In criminal proceedings, the prosecution must prove the charged offense beyond reasonable doubt. Suspicious circumstances, such as attending a meeting with an influential individual or withdrawing from a public tender, are not sufficient unless the evidence establishes the statutory elements of the alleged crime.

➠This case demonstrates why courts must distinguish between actual criminal cooperation and conduct resulting from coercion.

5. Can a Contractor Be Guilty of Bid Rigging After Withdrawing From a Tender?

5.1 When Withdrawal May Constitute Illegal Bid Coordination

Withdrawing from a government procurement tender is not automatically illegal. However, criminal liability may arise if a supplier agrees not to participate or not to compete on price with the intent required by Article 87, Paragraph 4.

Relevant evidence may include communications concerning compensation for withdrawal, agreements to allocate projects, coordinated pricing arrangements, or financial transfers linked to suppressing competition. Whether a particular arrangement constitutes collusive bidding depends on its purpose, participants, and supporting evidence.

5.2 When Threats and Intimidation Negate Criminal Agreement

A contractor who withdraws because of threats of physical harm may have a fundamentally different legal position. In such cases, the relevant questions include whether the contractor genuinely agreed to restrict competition, whether the decision was induced by intimidation, and whether the prosecution can establish criminal intent. Evidence of threats may undermine the allegation of a voluntary unlawful agreement.

⚠️Depending on the circumstances, the person applying intimidation  may also face separate criminal liability under the applicable provisions of the Government Procurement Act or Criminal Code.

6. Legal Defense Strategies in Government Procurement Criminal Cases

6.1 Preserving Communications and Evidence of Coercion

Contractors accused of bid rigging should preserve communications and documents explaining why they decided to participate in or withdraw from a tender.

Relevant materials may include telephone records, messaging conversations, meeting arrangements, witness information, tender documents, and records of threats. A detailed timeline can help establish whether the contractor's decision resulted from ordinary commercial considerations, unlawful coordination, or coercion.

➠Legal counsel can examine how these materials relate to the elements of Article 87 and whether the prosecution's interpretation is supported by the complete evidence.

6.2 Examining Individual and Corporate Criminal Liability

Government procurement investigations may involve both individual business representatives and their companies.

However, corporate liability must be assessed under the applicable statutory provisions rather than presumed solely from the actions of an individual. Important considerations include the representative's actual conduct, whether the offense was established, the company's involvement, and the relevant legal basis for imposing corporate penalties. In cases involving intimidation, the defense should distinguish between participation in unlawful coordination and withdrawal caused by external pressure.

7. Frequently Asked Questions

No. Withdrawal alone does not establish bid rigging. Criminal liability depends on whether the statutory requirements of Article 87 of the Government Procurement Act are satisfied.

Not by itself. A meeting or hospitality may be relevant evidence, but prosecutors must establish an unlawful agreement and the required criminal intent.

The provision carries imprisonment of six months to five years. Other consequences may arise depending on the offense and applicable legal provisions.

A contractor is not automatically guilty merely because they withdrew after being threatened. The court must determine whether the prosecution has proved the required unlawful agreement and criminal intent.

Telephone records, messages, witness testimony, recordings of threats, procurement documents, and evidence explaining the withdrawal decision may all be important.

Yes, corporate penalties may apply where the relevant statutory conditions are satisfied. Liability must be examined separately under the applicable law.

Preserve relevant evidence, avoid participating in unlawful bidding arrangements, seek legal advice, and consider reporting threats to the appropriate authorities.

8. Conclusion

The Taiwan High Court's decision illustrates an important principle in government procurement criminal cases: withdrawing from a tender after receiving threats does not automatically establish collusive bidding.

Although Taiwan's Government Procurement Act strictly prohibits unlawful agreements that undermine fair competition, criminal liability must be supported by evidence establishing the required statutory elements. Wiretap recordings, witness testimony, and the circumstances surrounding a contractor's withdrawal may be essential to distinguishing genuine bid rigging from coercion.

🧑🏻‍⚖️For contractors or companies facing government procurement investigations, Chien Sheng International Law Firm provides criminal defense assistance and case-specific legal analysis to help protect their procedural rights and business interests.

This case was not handled by Chien Sheng International Law Firm. It is presented as an educational analysis of a publicly available court judgment.

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