Civil Engineering Reference
In-Depth Information
Collusive tendering
Collusive tendering is where the bidders collude to undermine the competitive tender
process. As the tender process is so widely used in the construction industry, collusive
tendering (or bid rigging) is a particular risk. This is borne out by the Roofing cases
and the English Construction case, both of which are summarized in Section 21.5.
The collusion may range from the organized and systematic sharing out of contracts
between the 'bidders' (in the form of a bid rotation or quota scheme) to the practice of
'simple' cover pricing. Cover pricing is a form of bid rigging. 'Simple' cover pricing is
where party A has been invited to bid but, for whatever reason, does not wish to win
the work. Party A contacts one of the other bidders and asks for a cover price - in
other words a price that resembles a genuine bid but which will ensure that party A
does not win.
The message from the Competition Appeals Tribunal, however, is that collusive
tendering breaches the Chapter I prohibition, see
Apex Asphalt and Paving Co Limited
v.
Office of Fair Tradin
g (2005) and
Kier Group Plc & Others
v
.OiceofFairTrading
(2011). The nature of the collusion will simply determine the severity of the breach.
In short, co-ordination between competitors in relation to a tender is illegal unless
that co-ordination has been disclosed to the client in advance. Any decision whether
tobidandwhattobidshouldbeacommercialdecisionwhichismadebythebusiness
unilaterallyandonitsownaccount.
Information exchanges
The issue of information exchanges is a difficult area. In some circumstances, infor-
mation exchanges may actually benefit consumers; in other circumstances however,
such exchanges may fall foul of the competition rules. It all depends on the circum-
stances and, in particular, the nature of the information which is being exchanged. It
should be noted that an information exchange does not have to be formal. A casual
conversation at an industry event for example could well be sufficient to give rise to
an information exchange for the purposes of the competition rules.
The basic guideline is that sharing price or other commercially sensitive informa-
tion will breach the Chapter I prohibition. Such information will, if disclosed to a
competitor, give an insight into the disclosing party's competitive strategy and remove
the uncertainty about its future behaviour in the market. There will be particular
concerns where the information is confidential, where it relates to current or future
activities and/or where it is detailed. By contrast, there will generally be less of a risk
where information is historic, aggregated and/or purely statistical as such information
is less likely to influence current or future conduct in the market.
Where the parties to the information exchange remain active on the market, there
is a presumption that they have taken account of the information which has been
exchanged and this presumption applies even if the parties only met on one occa-
sion, see
T-Mobile Netherlands BV and Others
v.
Raad van bestuur van de Nederlandse
Mededingingsautoriteit
(2009). Accordingly, a one-off exchange of information could
besuicienttofallfouloftheChapterIprohibition.
