Penalty Clause Enforcement: A Collusive Bidding Case Study

Plus, a credit score explainer.

Readers of China eVTOL News will be familiar with the wide range of translated government documents published on the site, including regulations, government plans, draft opinions for public consultation, and aviation standards.

Across documents penalty provisions appear regularly.

But what do these penalties look like in real-world enforcement?

A recent case provides a concrete example. Two centrally administered state-owned enterprises were fined more than 13 million yuan for collusive bidding on a major civil aviation infrastructure project.

In the tendering context, Article 67, Paragraph 1 of the Regulations for the Implementation of the Tendering and Bidding Law of the People’s Republic of China (《中华人民共和国招标投标法实施条例》第六十七条第一款) reads —

“Where bidders collude with each other in tendering or collude with the tenderer in tendering, or where a bidder seeks to win the bid by bribing the tenderer or members of the bid evaluation committee, the winning bid shall be invalid, and a fine of not less than five per thousand and not more than ten per thousand of the amount of the winning project shall be imposed...”

The case below illustrates how the statutory penalty percentage is converted into actual financial penalties, alongside related operational restrictions and credit consequences.