Example:

It is a condition (express or implied) of a bid that each unsuccessful bidding contractor will bear its own bid costs.  Prior to bid submission, the competing contractors secretly agree that they will each include in their bid price an agreed additional sum of money representing the total estimated bid costs of all the competing contractors.  Whichever contractor is awarded the contract will then divide this sum of money between all the unsuccessful contractors which will thereby recover their bid costs.  This arrangement is not disclosed to the project owner.  The project owner believes that the losing contractors are bearing their own bid costs.  The project owner is therefore unknowingly paying more than it would have done had the unsuccessful contractors borne their own bid costs.

Explanation:

This is an alternative type of cartel arrangement to the one described in the example on the previous page.  In this case, the competitors are genuinely competing against each other, but the price will be increased by the addition in each competitor’s price of the losers fee.  Some countries’ laws may criminalise this type of conduct through specific anti-cartel laws, and other countries may treat it as a fraud offence (as the competitors are representing to the project owner that they are paying their own bid costs, when this is not in fact the case).