謙聖國際法律事務所

1. Can Affiliated Companies Legally Bid on the Same Government Contract in Taiwan?

1.1 Affiliated Companies, Related Businesses, and Genuine Competition

Companies participating in Taiwan government procurement projects may have existing commercial relationships with one another. They may share business partners, operate within the same industry, maintain upstream-downstream supply relationships, or qualify as affiliated companies under corporate law.

These relationships do not automatically prohibit the companies from participating in the same tender. The central legal question is whether each company genuinely competes for the contract or whether the apparent competition has been artificially created through an unlawful arrangement. Where affiliated businesses independently evaluate a procurement opportunity, prepare their own bids, determine their respective prices, and seek to maximize their individual commercial interests, genuine competition may still exist.

In such circumstances, the companies' corporate connections alone do not establish fraudulent bidding under the Government Procurement Act. The legal assessment changes when the participating companies do not exercise independent judgment and their bidding activities are effectively controlled by the same person or coordinated to produce a predetermined result.

➠For businesses involved in government procurement, the distinction between a legitimate commercial relationship and an unlawful bidding arrangement is therefore essential.

1.2 When Multiple Bids May Constitute Fraudulent Tender Manipulation

Fraudulent bidding may arise when several companies appear to compete independently but are actually participating in a coordinated arrangement designed to manipulate the procurement process.

For example, one individual might control the bidding decisions of multiple companies, determine their respective bid prices, or deliberately arrange for one company to submit a higher price so that another company is more likely to win. Such arrangements can create the appearance of market competition even when the participating bidders are not genuinely competing. If the conduct involves fraud or another illegal method and causes an incorrect result in the opening of bids, criminal liability may arise under Article 87, Paragraph 3 of Taiwan's Government Procurement Act.

However, the mere existence of affiliated companies, overlapping personnel, or commercial cooperation is not enough to establish this offense. Prosecutors must identify the specific unlawful conduct and prove how the accused individuals participated in the alleged manipulation.

⚠️This distinction is especially important because government procurement investigations may involve complicated corporate structures and business practices that are not inherently criminal.

2. New Taipei District Court Case: Why Two Companies Were Accused of Bid Rigging

2.1 The Power Plant Road Improvement Procurement Project

The case examined by the Taiwan New Taipei District Court arose from a government procurement project involving road improvements within the premises of a power plant.

According to the prosecution, a procurement employee of Company A wanted to ensure that Company A would successfully obtain the contract. The employee was also allegedly concerned that the tender might fail because an insufficient number of companies had submitted bids. To address this concern, the employee allegedly contacted the person in charge of Company B and arranged for Company B to participate in the same procurement project.

Prosecutors maintained that Company B had no genuine intention of competing for the contract. Instead, its participation was allegedly intended to increase the apparent number of bidders and allow the procurement process to proceed. Company A ultimately won the contract.

➠However, the prosecution considered the participation of Companies A and B suspicious and investigated whether their bids had been coordinated to create a false appearance of competition.

2.2 Allegations of Sham Bidding and Shared Bid Documents

The prosecution alleged that Company A's procurement employee had obtained Company B's corporate seals and used them to prepare bidding documents on Company B's behalf. According to the indictment, the bids of Companies A and B were then submitted to the procuring agency on the same day.

Prosecutors argued that the two companies were not genuine competitors and that their participation was intended to make the procuring agency believe that the required number of independent bidders had been reached. The alleged arrangement was characterized as a fraudulent method of causing an incorrect result in the opening of bids. The prosecution therefore charged Company A's procurement employee and Company B's responsible person under Article 87, Paragraph 3 of the Government Procurement Act.

⚠️The central dispute was whether the evidence actually established that Company A's employee had controlled Company B's bidding activities and arranged a sham bid. The court examined the bidding documents, relevant witness testimony, the role of Company B's personnel, and the objective circumstances surrounding the tender.

3. Government Procurement Act Article 87: What Must Prosecutors Prove?

3.1 Fraudulent Methods and Incorrect Bid-Opening Results

Taiwan's Government Procurement Act establishes legal rules intended to promote fair, transparent, and competitive public procurement.

Article 87 addresses several forms of unlawful interference with government procurement procedures. Under Article 87, Paragraph 3, using fraud or other illegal methods to prevent a company from bidding or to cause an incorrect result in the opening of bids may constitute a criminal offense. The statutory punishment is imprisonment for up to five years, with a possible additional fine of up to NT$1 million.

In a case involving allegedly coordinated bids, the prosecution must prove more than the existence of suspicious relationships between participating companies. Relevant issues include whether fraudulent or illegal methods were used, whether the defendant intentionally participated in the alleged conduct, and whether the statutory requirements concerning the procurement process were satisfied. Where prosecutors allege that one company submitted a sham bid solely to increase the number of participants, they must establish the alleged arrangement through legally sufficient evidence.

➠A criminal conviction cannot be based solely on assumptions about what the defendants might have intended.

3.2 The Difference Between Business Relationships and Substantive Bid Control

The distinction between legitimate affiliated-company bidding and fraudulent bid rigging often depends on who actually controlled the bidding decisions.

If two companies independently decide whether to participate, prepare their respective submissions, and determine their own bid prices, the fact that they maintain a commercial relationship does not automatically make their participation unlawful. Conversely, if one individual controls the bidding activities of multiple companies and uses those companies to create artificial competition, the arrangement may raise criminal concerns.

Relevant evidence may include communications between the companies, bidding document preparation records, internal approval procedures, pricing decisions, and testimony from the individuals responsible for submitting the bids. The prosecution must establish the accused person's actual involvement rather than relying exclusively on corporate connections or the fact that the companies participated in the same tender.

🧑🏻‍⚖️In the New Taipei District Court case, this distinction became decisive because the prosecution could not sufficiently establish that Company A's employee had exercised substantive control over Company B's bidding process.

4. Why the Court Found Insufficient Evidence of Coordinated Bidding

4.1 Differences Between the Companies' Bidding Documents

One of the prosecution's central allegations was that Company A's procurement employee had prepared bidding documents for both Companies A and B.

To evaluate this claim, the court examined and compared the documents submitted by the two companies. The court found that the handwriting appearing in the respective sets of bidding documents did not demonstrate significant similarity. This weakened the allegation that the same individual had prepared both submissions.

The difference in handwriting did not necessarily establish that the companies had acted independently in every respect. Nevertheless, it meant that the documentary evidence did not sufficiently support the prosecution's specific theory. The court could not simply assume that Company A's employee had prepared Company B's documents because the companies had participated in the same procurement project. This aspect of the judgment illustrates why the details of documentary evidence matter in criminal proceedings.

⚠️Where prosecutors allege that one person controlled multiple bids, the documents and other supporting evidence must be capable of establishing that connection.

4.2 The Deceased Employee Who Managed Company B's Bidding Affairs

Witness testimony and other evidence indicated that Company B's bidding affairs had been handled by another employee, surnamed Wang.

Wang had exercised considerable authority within Company B and was involved in the company's business operations. Some individuals who had business dealings with Company B even believed that Wang was its actual owner. These circumstances suggested that Wang may have independently managed the company's bidding decisions and related documentation. The court therefore could not exclude the reasonable possibility that Wang had decided to participate in the procurement project and prepared the bidding documents without the knowledge of Company B's nominal responsible person.

An additional evidentiary difficulty arose because Wang had already passed away.

As a result, the court could no longer question him to determine whether Company B had genuinely intended to compete for the contract or whether he had coordinated with Company A to submit a sham bid. The inability to clarify Wang's actual intentions left an important factual uncertainty. The court held that this uncertainty could not automatically be resolved against the defendants.

➠Where the evidence supports a reasonable alternative explanation, the prosecution must still establish the alleged criminal conduct beyond a reasonable doubt.

5. Why the Number of Actual Bidders Undermined the Prosecution's Theory

5.1 Allegations That One Person Submitted Both Companies' Bids

The prosecution alleged that Company A's procurement employee had personally carried and submitted the bidding documents of both Companies A and B.

The court examined this allegation in light of the circumstances surrounding the submission of bids. If one person had openly submitted bids on behalf of two supposedly competing companies, such conduct could have raised immediate concerns regarding the independence of the bids. However, the evidence did not establish that the personnel responsible for receiving the bidding documents had objected to or reported such an arrangement at the time.

The absence of an objection did not conclusively prove that the alleged joint submission had never occurred. Nevertheless, it was a relevant circumstance when assessing whether the prosecution's account had been sufficiently established. The court considered this issue alongside the remaining evidence and found that the alleged joint submission could not be accepted as proven merely on the basis of the prosecution's assertions.

5.2 Two Other Companies Had Already Submitted Bids

An especially important finding concerned the actual number of companies that had participated in the procurement project.

The court reviewed the procurement records and discovered that two other companies had already submitted bids on the day before Company A submitted its bid. This fact significantly weakened the prosecution's theory. The prosecution alleged that Company A had arranged for Company B to submit an additional bid to prevent the tender from failing because too few companies had participated. However, if two other companies had already submitted bids, Company A's own submission would have brought the total number of participating bidders to three.

Under the applicable first-opening requirement relied upon in the case, three qualifying bids would ordinarily be sufficient to proceed with the opening of bids, subject to the relevant procurement rules and circumstances. The court therefore questioned why Company A would have needed to arrange an additional sham bid through Company B merely to satisfy the bidder-number requirement. Such an arrangement would have exposed the participants to significant criminal risk without an apparent need to increase the number of bidders.

➠This inconsistency undermined the prosecution's proposed criminal motive.

Although the absence of an obvious motive does not automatically establish innocence, it may be relevant when evaluating whether the alleged arrangement is supported by the objective evidence. In this case, the procurement records provided an alternative factual context that the prosecution had not sufficiently overcome.

6. Burden of Proof and Reasonable Doubt in Taiwan Bid-Rigging Cases

6.1 Code of Criminal Procedure Articles 154 and 301

Taiwan's criminal procedure is governed by the presumption of innocence and the requirement that criminal facts be established through evidence.

Article 154, Paragraph 2 of the Code of Criminal Procedure provides that criminal facts must be established by evidence and that no criminal fact may be found without evidence. Article 301, Paragraph 1 further requires a judgment of acquittal when the defendant's alleged offense cannot be proven.

These provisions mean that prosecutors must present evidence sufficient to establish guilt beyond a reasonable doubt. A defendant is not required to prove innocence merely because the circumstances appear suspicious. In government procurement cases, the court must distinguish between evidence establishing a commercial relationship and evidence proving unlawful coordination.

The prosecution must also establish the required criminal intent and the defendant's participation in the alleged offense. Where the evidence remains insufficient, the principle of in dubio pro reo requires unresolved reasonable doubt to be resolved in favor of the accused.

➠This principle does not mean that every theoretical possibility must be excluded. It means that a criminal conviction cannot be entered while a reasonable doubt concerning the defendant's guilt remains.

6.2 Why the Defendants Were Acquitted

After examining the evidence, the New Taipei District Court found that the prosecution had not established the alleged fraudulent bidding arrangement beyond a reasonable doubt.

The bidding documents did not sufficiently support the allegation that Company A's procurement employee had prepared both companies' submissions. Evidence concerning Wang's role in Company B created a reasonable possibility that Company B's bidding affairs had been handled independently. Because Wang had died, the court could not conclusively determine whether he had intended to compete genuinely or had participated in an unlawful arrangement. The prosecution's allegation concerning the simultaneous submission of bids also lacked sufficient supporting evidence.

Most importantly, procurement records showed that two other companies had already submitted bids before Company A. This undermined the claim that Company A needed Company B's participation merely to satisfy the minimum number of bidders.

Taken together, these evidentiary weaknesses prevented the court from finding that the defendants had committed the charged offense. The court therefore acquitted Company A's procurement employee and Company B's responsible person.

💡The judgment demonstrates that criminal liability under the Government Procurement Act must be established through evidence rather than inferred solely from suspicious circumstances or business relationships.

7. How Companies Can Protect Themselves Against Bid-Rigging Allegations

7.1 Preserve Evidence of Independent Bidding Decisions

Businesses participating in government procurement should maintain clear records demonstrating how their bidding decisions were made.

Important documents may include:

• tender announcements
• internal bidding approvals
• pricing calculations
• cost estimates
• bidding documents
• bid bond records
• employee instructions
• communications concerning the procurement project

Where affiliated companies participate in the same tender, evidence showing that each company independently evaluated the project and determined its own bidding strategy may become particularly important.

Records identifying who prepared the documents, approved the bid prices, and authorized submission can help clarify the roles of the individuals involved. If a criminal investigation later arises, these documents may help distinguish legitimate competition from allegations of coordinated bidding.

💡Companies should preserve complete and authentic records rather than selectively retaining materials favorable to one side. Early identification of relevant evidence can also reduce the risk that important records become unavailable.

7.2 Review Corporate Relationships and Procurement Procedures

Companies with affiliated businesses, shared personnel, or close commercial relationships should carefully evaluate their procurement practices.

The existence of a corporate relationship does not automatically make simultaneous bidding unlawful. However, arrangements involving shared bidding decisions, coordinated pricing, or the submission of bids without genuine competitive intent may create legal risks. Businesses should clarify who is authorized to make bidding decisions and ensure that procurement activities comply with the applicable legal requirements. Internal compliance procedures may include documenting independent pricing decisions, maintaining accurate bidding records, and reviewing communications between related companies.

When a company receives a request to provide corporate seals, bidding documents, or other materials for another party's procurement activities, the purpose and legal implications of the request should be carefully examined.

⚠️The objective is not merely to avoid suspicion but to ensure that participation in government procurement reflects lawful and genuine commercial conduct.

8. Frequently Asked Questions About Affiliated-Company Bidding in Taiwan

Yes. Affiliated companies are not automatically prohibited from participating in the same tender merely because they share corporate or commercial relationships. The legal assessment depends on whether their bidding activities involve genuine competition and comply with the applicable procurement rules.

No. Simultaneous bidding does not automatically establish criminal liability. Prosecutors must prove that the alleged conduct satisfies the elements of a specific offense under the Government Procurement Act.

Article 87, Paragraph 3 addresses the use of fraud or other illegal methods to prevent a company from bidding or cause an incorrect result in the opening of bids. Criminal liability depends on proof of the relevant statutory elements.

Such an arrangement may raise legal concerns, particularly if it is part of a scheme to create artificial competition. However, the criminal consequences depend on the actual conduct, the applicable legal provisions, and whether the prosecution can establish the elements of an offense.

No. Shared business partners, overlapping personnel, or affiliated-company relationships do not independently establish fraudulent bidding. The prosecution must prove the alleged unlawful coordination through sufficient evidence.

The court found insufficient evidence that Company A's employee had controlled Company B's bidding process. Differences in bidding documents, uncertainty concerning Company B's employee, and procurement records showing that two other companies had already submitted bids created reasonable doubt.

Under Article 48 of the Government Procurement Act, the first opening of bids generally requires at least three qualified bidders, subject to statutory exceptions and applicable procurement procedures. The requirements for subsequent tender procedures may differ.

Yes. If an employee who handled bidding activities has died, the inability to clarify that person's decisions may create evidentiary difficulties. Courts must evaluate whether the remaining evidence is sufficient to establish the alleged offense.

Important evidence may include bidding documents, internal approvals, pricing calculations, communications, procurement timelines, employee responsibility records, and documents showing how each company made its bidding decisions.

Yes. A criminal defense lawyer can examine procurement records, analyze the alleged statutory violations, identify evidentiary gaps, prepare defense submissions, and represent the accused during investigation and trial. The available defense strategy depends on the individual case.

9. Conclusion: Affiliated Bidding Is Not Automatically Criminal Bid Rigging

Affiliated companies and businesses with existing commercial relationships may participate in the same government procurement project without necessarily committing bid rigging. The decisive issue is whether their participation reflects genuine competition or an unlawful arrangement designed to manipulate the tender process.

The New Taipei District Court's 2026 acquittal illustrates the importance of distinguishing suspicious circumstances from criminal conduct proven by evidence. In this case, the prosecution alleged that Company A had arranged for Company B to submit a sham bid to satisfy the required number of bidders. However, the evidence did not sufficiently establish that Company A's employee had controlled Company B's bidding activities.

The bidding documents did not support the alleged common preparation, the role of Company B's deceased employee remained uncertain, and the procurement records showed that two other companies had already submitted bids. These circumstances undermined the prosecution's theory and left reasonable doubt concerning the defendants' criminal liability. The court therefore acquitted both defendants.

For companies participating in Taiwan government procurement, the judgment provides an important reminder: corporate relationships and unusual bidding circumstances must be examined carefully, but they cannot replace proof of the statutory elements of a criminal offense. Maintaining complete procurement records, documenting independent bidding decisions, and seeking legal assistance when an investigation begins can help businesses protect their rights.

🧑🏻‍⚖️Chien Sheng International Law Firm provides legal assistance in government procurement, economic crime, and criminal defense matters throughout Taiwan. If you or your company is facing allegations of bid rigging, fraudulent bidding, or violations of the Government Procurement Act, our attorneys can assist in evaluating the evidence, explaining the relevant legal requirements, and developing an appropriate defense strategy.

Case Disclosure: This article is an independent legal analysis of Taiwan New Taipei District Court, 2026 Criminal Judgment No. 193. Chien Sheng International Law Firm did not handle or represent the parties in this case. The discussion is intended for general legal education and does not replace individualized legal advice.

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