ICCC wary of cartel behaviour

The National Business

By PETER ESILA
STAKEHOLDERS in the economy have raised concern regarding cartel conduct in public procurement, the Independent Consumer and Competition Commission says.
Chief executive officer Paulus Ain said such cartel conduct in the public procurement process included bid rigging.
He said bid rigging or collusive tendering occured when businesses, that would otherwise be expected to compete, conspired to raise prices or lower the quality of goods or services for purchasers who wished to acquire products or services through a bidding process.
Ain said public and private organisations often rely on a competitive bidding process to achieve better value for money.
“Lower prices and better products are desirable because they result in resources either being saved or freed up for use in other areas.
“The competitive process can achieve lower prices or better quality and innovation only when companies genuinely compete.
“Bid rigging can be particularly harmful if it affects public procurement. Such conspiracies take resources from purchasers and taxpayers, diminish public confidence in the competitive process, and undermine the benefits of a competitive marketplace.”
A cartel conduct is any agreed business behaviour between two or more competitors that has the purpose and effect of lessening competition in a market.
Cartel agreements can be written, or formal; however, because they are secretive, they are usually verbal and informal.
Ain said other common forms of cartel conducts include:

  • PRICE fixing (when competitors agree on pricing instead of competing against each other);
  • OUTPUT restriction or control (when competitors agree to restrict or limit the amount or type of goods and services available or produced); and,
  • MARKET/customer sharing (when competitors agree to divide a market between themselves so they do not have to compete).

“The ICCC has however embarked on advocacy on cartel conduct, not only to educate businesses and the public on what cartels are but to encourage them to report such conduct.”