Anticomps frequently occur in tandem with corruption, particularly in public procurement…..so both should be enforced by coord. between both authorities
AL: cartels in last 10 years amount to sales of US$1 trillion >>> CL: overcharging consumers more than US$300 billion.
ways officials restrict procurement competition:
- contract specifications profit a particular company.
- splitting up a high value contract into a number of smaller ones, in order for them to fall below the value thresholds which require a contract to be opened to competition.
- a procuring entity bundles a number of different contracts together to create a tender that is so complex that only a particular company is able to deliver – can be used to avoid truly competitive tender procedures
- officer demands bribes in exchange for limiting the number of competing firms. Corruption is then likely to distort the competitive pressure on firms to bid with prices that reflect the cost structure of most efficient firms, replacing price competition with bribe competition.
- -corruption also facilitate collusion among competing firms, especially when there are resubmission opportunities and the public official has legal discretion to allow for a re- adjustment of (all) submitted offers before the official opening.
- -the officer provides bidders with information to rig bids and may even operate as a cartel enforcement mechanism…bid rigging= whereby conspirators agree in advance who will submit the winning bid and to distribute between themselves the profits…..Competitors who agree not to bid can be offered compensation payments or receive subsequent contracts or subcontracts from the designated bidder….egs of Bid-rigging:
– “cover bidding”, when firms agree to submit bids higher than the bid of the designated winner, or with terms unacceptable to the purchaser pb
– ‘bid suppression”, where one or more companies agree not to bid or withdraw their bids; and “bid rotations”, where firms agree to take turns to be the winning bidder. Competitors may also agree on market allocations and agree not to compete for certain customers or geographic areas
Regulatory capture
regcmas are often the starting point of corruption…. how could regcmas willingly and easily create anticomps (to get bribes by favouring certain firms) ?:
<> cocoo: ew (clcp overarching goal) is harmed by the symbiotic relationship (gov/regcmas)…eg regcmas influence law-making….
<> cocoo: the presumption that regcmas are not themselves the source of corruption, is false. thus, they should not be allowed to do any of these:
- using discretion in clcp interpretion …eg “fair” competition,
- controlling anticomp investigations
- They are in a position to influence on law-makers, creating a symbiotic relationship with the government, which has a long-term effect on the economy
- regcmas can be subjected to undue business influence and state capture.
- they can “buy” laws, or/and lobby, to create more regulations to impede the entry of new players
grants/tenders/donations to firms and regcmas, should be conditional to competition and anticorruption activities, ensuring that proper frameworks are in place, and really have in place sufficient quality, resources, capacity and competences
<> cocoo: wpi challenge grants/tenders/donations that currently or potentially may harm competition and beopen to corrupion
in uk, both the competition and anti-corruption laws can be breached, even when no (bribe) payment has been made to pb employees.
transparency is considered crucial for preventing corruption…. However, it can have a detrimental impact on competition by:
a. resulting in the unnecessary dissemination of commercially-sensitive information, allowing firms to align their bidding strategies on their competitors and facilitating the formation and monitoring of bid-rigging cartels. Disclosing sensitive information, such as the identity of bidders and terms and conditions of each bid, may allow competitors to detect deviations from a collusive agreement.
b. making the procurement processes more predictable, which can also facilitate collusive practices.
Cl attracts corruption because regcma imposes cl fines/remedies/compensation, as investigator and judge
<> cocoo v regcmas
regcma are not always independent of political control, and retain too wide discretion in calculating fines and granting leniency, which provides opportunities for corruption……regcma officers should be required to uphold standards of integrity and transparency, act with impartiality, and to disclose conflicts of interest. Measures should also be envisaged to regulate their post-employment and introduce cooling-off periods after the termination of their competition duties
Sanctions + penalties, [such as civil and criminal fines and penalties, and debarment] + Reputational damage
In countries with certificates of independent bid determination CIBD, false company statements to distort competition during procurement, may be punished.
NAO: bidder exclusion. Public Procurement, Cois, and Whistleblowing
The grounds for exclusion of bidders from public procurement procedures are set out in The Public Contracts Regulations 2015 (the ‘Regulations’): these rules set out the circumstances in which bidders must, or may, be excluded from a public procurement process for a variety of criminal offences and in other specific situations1. Regulation 57 covers the grounds for mandatory and discretionary exclusion, exceptions to exclusions, duration of exclusion, and self-cleaning. Regulations 58 to 60 covers the methods by which the existence of grounds for exclusion can be verified.
Mandatory exclusion
exclude bidders convicted of certain offences in UK national law (Regulation 57(1) (a)-(m)). These include certain offences relating to bribery, corruption, conspiracy, fraud affecting the European Community’s financial interests, money laundering, as well as certain offences related to terrorism, proceeds of crime, drug trafficking, human trafficking and modern slavery. In addition to these offences, a final and binding judicial or administrative decision that a bidder is in breach of tax and social security obligations is also a ground for mandatory exclusion (Regulation 57(3))
Discretionary exclusion
The Regulations allow, but do not require, In-scope Organisations to exclude bidders in particular situations (Regulation 57(8)(a)-(i)).:
1/Where the In-scope Organisation can demonstrate a violation of environmental, social or labour law obligations…E.g. breaches of obligations relating to minimum wage, working hours or the deposit of controlled waste.
2/Where the bidder is bankrupt, is the subject of insolvency or winding-up proceedings, is in administration, where it is in an arrangement with creditors, where its business activities are suspended or it is in an analogous situation arising from a similar procedure under the laws and regulations of a foreign country.
3/Where the In-scope Organisation can demonstrate that the bidder is guilty of grave professional misconduct which renders its integrity questionable…E.g. wrongful conduct which impacts on the professional integrity of the supplier, for example convictions for sufficiently serious criminal offences not covered under the grounds for mandatory exclusions, breach of ethical standards, or breach of contract which amounts to wrongful intent, gross negligence, anti-competitive behaviour, breach of intellectual property rights or violations of environmental or social obligations.
4/Where the In-scope Organisation has sufficiently plausible indications that the bidder has entered into agreements with other economic operators aimed at distorting competition.
E.g. agreements for price fixing, collusive tendering or market sharing.
5/Where a conflict of interest within the meaning of Regulation 24 cannot be effectively remedied by other, less intrusive, measures….E.g. where relevant staff members have a direct or indirect financial, economic or personal interest which may compromise their impartiality in the procurement procedure and the conflict of interest cannot be otherwise remedied (for example by that particular person not being involved in the procurement).
6/Where a distortion of competition from the prior involvement of the bidder in the preparation of the procurement procedure, as referred to in Regulation 41, cannot be effectively managed by other, less intrusive, measures….E.g. influencing the specification, or evaluation criteria to the advantage of their organisation.
7/The bidder has shown significant or persistent deficiencies in the performance of a substantive requirement under a prior public contract, a prior contract with a contracting entity, or a prior concession contract, which led to early termination of that prior contract, damages or other comparable sanctions…E.g. contract terminated due to supplier default, for example material non-fulfilment of goods and/or services.
8/ Where the bidder is guilty of serious misrepresentation in supplying the information required for the verification of the absence of exclusion grounds or the fulfilment of the selection criteria; or has withheld such information or is unable to provide supporting documents required under Regulation 59…..E.g. non-disclosure of grounds for exclusion, or inability to provide documentary proof in support of their self-certification.
9/ Where the bidder has undertaken to unduly influence the decision-making process or obtain confidential information that may confer upon it undue advantages in the procurement process, or has negligently provided misleading information that may have a material influence on decisions concerning exclusion selection or award….E.g. influenced the lot structure of a procurement or framework agreement to their advantage, or sought to gain pricing information from a competitor.
10/ bidder’s breach of obligations relating to the payment of tax or social security contributions… As with the mandatory exclusion ground, the ground for discretionary exclusion for breach of tax and social security obligations no longer applies where the supplier has paid, or entered into a binding arrangement with a view to paying
The discretionary exclusion grounds do not apply to persons or entities beyond the bidder, unlike the mandatory exclusion grounds
Self-declaration
The Standard Selection Questionnaire template asks bidders to initially self-declare their status against the exclusion grounds. This reduces the burden on bidders providing evidence that the exclusion grounds do not apply and aligns with the process required by the Regulations for the European Single Procurement Document (see Regulation 59).
The procurement documents must provide details on how the self-declaration is to be accessed.
A self-declaration is usually required from all organisations that form part of the bidder’s bidding group/consortium and any subcontractors that the bidder relies on to meet the selection criteria, regardless of which tier they represent in the supply chain.
Where the bidder is a group of organisations, including a joint venture or partnership created (or to be created) for the purpose of the contract, each organisation in that bidding group and each relevant subcontractor must complete the self-declaration in relation to all the exclusion criteria.
In-scope Organisations will usually only verify the self-declaration made by the winning bidder prior to award. Verification can be completed with reference to means of proof and/or supporting documentation. Evidence can be sought at any time if this is necessary to ensure the proper conduct of the procedure (Regulation 59(8)).
Regulation 60: proof of the exclusion grounds:
a/ For mandatory exclusion grounds: an extract from the judicial register, such as judicial records, or equivalent documents issued by a Member State or the country where the bidder is based
b/ for discretionary grounds: certificates issued by a competent authority in a Member State or other country. Where such documents are not issued, a declaration on oath, or solemn declaration before a competent judicial or administrative authority, a notary or a competent professional or trade body, may be provided (Regulations 60(4) and (5)). Regulation 59 (10) enables In-scope Organisations to ask bidders to supplement or clarify the certificates received under Regulation 60
In-scope Organisations must request up to date evidence from the winning bidder before award of the contract
A supplier negligently providing misleading information that may have a material influence on decisions concerning exclusion, may be terminated [discretionary exclusion ground] (Regulation 57(8)(i)), and may be banned from bidding for other public contracts for three years. If a contract has been entered into, the supplier may be sued for damages and the contract may be rescinded. If fraud, or fraudulent intent, can be proved, the supplier or their responsible officers may be prosecuted and convicted of the offence of fraud by false representation, and excluded from further procurements for five years.
Self-cleaning
If a bidder provides sufficient evidence of ‘self-cleaning’, In-scope Organisations must not exclude the bidder from the procurement procedure. Bidders must be given the opportunity to submit evidence of self-cleaning (Regulation 57(13))…eg: the bidder has paid compensation in respect of any damage caused by the criminal offence or misconduct; clarified the facts and circumstances in a comprehensive manner by collaborating with investigating authorities; and taken concrete technical, organisational and personnel steps that are appropriate to prevent recurrence of the offence or misdemeanour (Regulation 57(15)).
Conflicts of interest (coi)
Regulation 24 requires In-scope Organisations to prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures so as to avoid any distortion of competition, and to ensure equal treatment of all economic operators.
<> cocoo will show competition distortions based on cois.
where “relevant staff members” have a direct or indirect financial, economic or other personal interest which might compromise their impartiality and independence in the procurement process. “Relevant staff members” refers to staff members of the In-scope Organisation, or of a procurement service provider