3 November 2021

Agencies warned about cartel conduct in procurement processes

| Ian Bushnell
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ACCC chair Rod Sims

ACCC chair Rod Sims is concerned some public servants may not be fully aware of the risk of breaching cartel laws. Photo: ACCC.

Public servants have been warned about how they approach tenders in the multi-billion dollar procurement sector amid concerns about potential encouragement of cartel behaviour by companies.

The competition watchdog has urged public sector agencies to be alert to the potential for collusion between bidders during procurement processes, and have been told to familiarise themselves with the law on cartels.

The warning follows a recent Australian Competition and Consumer Commission investigation where an agency contemplated cooperation by competing businesses on government tenders.

The ACCC is also taking action in the Federal Court against a company and its director for involvement in the alleged attempt to rig a bid connected to a tender by the National Gallery of Australia.

Cartel conduct is illegal and can involve price-fixing, bid-rigging, market sharing, and controlling the amount of goods or services available.

The ACCC is concerned that some public servants and businesses may not be sufficiently aware of the risk of breaching cartel laws during the procurement process.

“Encouraging businesses to discuss their bids with each other, or to make agreements about who will bid for a particular tender, is likely to amount to cartel conduct which is against the law,” ACCC Chair Rod Sims said.

“Cartel activities may start with a small encouragement or an innocent remark, but this can create an environment that enables, condones or facilitates collusive conduct between competing firms.”

Mr Sims said competition to supply governments with goods and services was crucial in ensuring value for money for taxpayers.

“Cartel conduct in government procurement is therefore not only against the law, but will often result in taxpayers paying considerably more for goods and services,” he said.

Mr Sims urged procurement staff to familiarise themselves with an ACCC guide on cartel deterrence and detection.

“It is also important for prospective bidders to be aware of their obligations and comply with the law,” he said.

“We encourage public sector procurement professionals to proactively review their procurement processes and identify and remedy any potentially anti-competitive elements in any procurement procedures, policies or guidelines.”

In 2019-20, there were 81,174 contracts for the Federal Government published on AusTender with a combined value of $53.9 billion.

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