This paper studies a bid‑rigging cartel that operated in the Swiss canton of Ticino from 1999 to 2005. The cartel covered virtually every road construction contract in the region. It did so under a written agreement called the “convention,” which set out detailed rules for how members would allocate contracts and coordinate bids. Remarkably, the group did not use side payments. Instead, it relied on rules, weekly meetings and the threat of exclusion from essential inputs to keep members in line.

The authors combine unusually rich documentary evidence with statistical methods to reconstruct how the cartel worked. The convention listed allocation criteria such as firms’ backlog of work, distance to the project, and firm specialization. Members met weekly to announce tenders and assign a designated winner. Firms then prepared cover bids to make the outcome look like a genuine competition. The researchers test whether observable cost proxies—like distance to the site and existing backlog—systematically predicted who won and how bids were ranked.

They also apply modern estimation tools. The paper reports regression and machine‑learning analyses, including LASSO regression, ensemble methods, and a double machine‑learning approach to estimate the cartel’s price effects. These methods show that the cartel’s allocation closely matched what a perfectly coordinated cartel would choose if it knew firms’ costs. The group deliberately aligned bids with cost signals so that standard econometric tests, which look for unusual bidding patterns, often failed to detect the collusion.

Why this matters: public procurement is a large part of the economy and is vulnerable to collusion. Prior studies typically find overcharges of 15–30% from bid‑rigging. In this case the authors estimate average overcharges of at least 45% and possibly substantially higher. The cartel also controlled access to asphalt, an essential input produced at mixing plants, which strengthened its power. One plant co‑owned by ten firms supplied 50–60% of asphalt in the region, and rules in the convention prevented sales to outsiders. Those facts made it costly for any firm to refuse to follow the cartel.