The Competition and Markets Authority (CMA) and the Crown Commercial Service have joined together to create an anti-bid-rigging procurement tool. Specifically designed for procurement professionals, the free e-learning tool serves to increase awareness of bid-rigging, how to avoid it, spot the warning signs and proceed if illegal activities are uncovered.
The package, released in June, includes a 60 second summary, an animated video explaining what bid-rigging looks like in practice, and a guide on competition law risk, including case studies of businesses fined for illegal activity.
e-Learning and information for businesses
CMA’s Senior Director of Advocacy, John Kirkpatrick, said “This e-learning package will help procurers spot cases and root out attempts to cheat before they cause any damage.”
The guides start from the reasonable position that many businesses may not know which types of anti-competitive activity are illegal. Outlines things to avoid (price-fixing, bid-rigging, market sharing and resale price maintenance) and also situations to avoid (discussing pricing with competitors, especially in small markets).
Cartels inflate costs by at least 10%
In an open letter to procurers, Kirkpatrick urges businesses to engage in healthy competition and be on the alert to those ‘trying to game the system’. Likening bid-rigging to cartel behaviour, he states that these cartels overcharge from upwards of 10%, evidently costing taxpayers millions of pounds.
The letter also outlines the most common forms of bid-rigging such as: bid rotation, whereby companies take it in turns to present the ‘best’ bid; cover pricing which involves companies submitting inflated prices to ensure another company appears to offer better value; and bid suppression, where cartel members agree not to submit a bid thereby reducing competition.
The CMA has a hotline and priority email for anyone suspecting a business of bid-rigging. Call 020 3738 6888 or email email@example.com.