Illegal deals to rig bids for both public and private contracts are on the rise, according to the State’s competition watchdog, which is extending an immunity programme for witnesses in an effort to tackle price-fixing cartels.

The Competition and Consumer Protection Commission (CCPC) has broadened a programme that provides immunity from prosecution for witnesses who provide information on cartels, or secret price-fixing agreements between businesses.

The commission is lifting a ban that prevents companies that lead or instigate cartels from qualifying for immunity, which it says will give participants in the immunity programme greater legal certainty.

According to commission member Patrick Kenny, the definition of a cartel's "leader" has not been clear, with the result that witnesses have risked losing immunity and having their evidence used against them if their business was found to have led the cartel.

The change removes any doubts and also brings the Republic’s practice in line with the approach taken in other EU countries. The ban still applies to companies that coerce others to join or remain within the arrangement.

Mr Kenny warned that bid rigging, where a number of companies tender for a contract but decide in advance which should win, is becoming more common. The practice increases costs by up to 30 per cent. Such deals, he added, could potentially add up to €300 million to the State’s €13 billion public procurement bill in a year.

Bid rigging allows the “successful” business to inflate the price. The others involved are paid off, or the companies agree to rotate contracts.

CCPC chairwoman Isolde Goggin said that cartels result in higher prices, poorer quality and less choice for consumers. "They represent the most serious form of anti-competitive behaviour," she said.