The Australian Competition and Consumer Commission (“ACCC”) is also warning government agencies against potential bid rigging in the public procurement process.
The ACCC has cautioned Australian government agencies (the “Government”) to be on guard against “bid rigging” between competitors with respect to contracts with the government (“public contracts”). Bid-rigging occurs when multiple competitors agree to allow a competitor to âwinâ a bid or tender for the purpose of increasing cartel members’ profits, while maintaining a competitive facade.
Public procurement represents an important business opportunity for companies in Australia. In 2020-2021 alone, there were 84,054 government contracts with a combined value of AUD 69.8 billion. The government recently declared its intention to consolidate its outsourced services and technologies, which means there will likely be fewer public contracts, but those that remain will be more valuable.
The ACCC’s recent lawsuit of a building management company and its sole director prompted the ACCC’s warning. According to the ACCC, Delta Building Automation and its director struck a deal with a competitor at a meeting in a Canberra cafÃ© to set the price of bids for the replacement and maintenance of a building management computer system at the The government’s National Gallery of Australia (“NGA”). Although the NGA has not been involved in these proceedings, the chairman of the ACCC has expressed concern that public procurement officials are complicit, intentionally or unintentionally, bid-rigging.
In line with ACCC’s focus on bid-rigging in the public sector, particularly in the construction sector, ACCC announced in late October that it had taken legal action against two tile companies in the Sydney area, First Class Slate Roofing and Mr Shingles, for allegedly rigging an offer to provide slate roofing services to Wesley College at the University of Sydney, as well as a private offer in the Sydney suburb. The ACCC’s warning, its recent lawsuits against Delta, and cartel-tiling proceedings show that the regulatory focus is more on bid-rigging in public and private procurement processes.
Companies involved in public sector tenders in Australia should expect the government to strengthen the procedural requirements and oversight associated with tendering for public procurement. The ACCC was particularly careful to avoid any “little encouragement[s]”or” innocent remark[s]”which potentially facilitate collusive conduct between competitors. Now is a good time to ensure that employees participating in public offerings in Australia are aware of the company’s antitrust safeguards and antitrust compliance policy. This is particularly important when companies are involved in a bid, an area of ââhigh regulatory interest for ACCC.