Back in June, the Competition & Markets Authority (CMA) published an open letter to procurement professionals announcing new guidance and learning resources designed to help combat collusion between suppliers bidding for public contracts. Along with a text summary, the new resources include an e-learning module and some admirably accessible and informative animated videos. Unsurprisingly, this development in the battle against illegal anti-competitive practices received a warm reception in procurement circles, with the Chartered Institute of Procurement and Supply and the Local Government Association making the resources available to their members. This move can be seen as a small but positive step forward in efforts to protect the public sector’s reputation as a fair and transparent place to do business and should be applauded.
We last touched on this subject in 2009 following a round of fines imposed by the Office of Fair Trading (superseded in 2014 by the CMA) on over one hundred construction firms found to be guilty of bid rigging. The size and stature of many of the companies involved was surprising: not so much dodgy purveyors of rickety garage conversions, more a who’s who of premier league construction companies. Some in the industry expressed concern over potential job losses resulting from the fines, but we felt that these sanctions were not overly punitive when framed as a percentage of turnover. Indeed, some of the firms had their fines reduced substantially under the CMA’s leniency policy in return for confessing when first confronted.
No one would wish to see the reputation of an otherwise trustworthy company besmirched and it’s financial position damaged by the selfish excesses of a few well placed bad apples, but there must be sanctions against illegal activities and the guilty parties were fortunate to avoid being blacklisted from public contracts altogether. The new guidance is a reminder that this problem has not gone away: cartels remain a corrosive and costly reality for both the public sector and the wider business world. Legal deterrence and enforcement only go so far, as there will always be those to whom greed eclipses all other considerations. Accordingly, perpetual vigilance is vital and it is incumbent on all parties involved – buyers, law-abiding suppliers and whistleblowers – to act as the first line of defence. So how exactly do the cowboys cheat the system? The CMA outlines three common forms of collusion: