CCI to bring new toolkit for curbing cartels in public procurement

The Competition Commission of India (CCI) is coming up with a set of latest diagnostic tools for public sector undertakings to keep a check on cartelisation in public procurement, according to sources. The move comes in light of the reforms ushered by the new Competition Amendment Act. 

The toolkit, meant to be used by public procurement officers, would be launched by Finance Minister Nirmala Sitharaman on Tuesday along with FAQs on combinations to cover topics such as deal value threshold, substantive India operations among other things. 

“Nearly 30 per cent of GDP is spent on government procurement. Bidders often form cartels which end up costing the PSUs and wastes public funds. The latest diagnostic tools would take into account developments, judgments and the new competition act,” a source said. 

The antitrust watchdog has been concerned over private companies taking advantage of lack of such checks in the systems to form cartels while bidding for public procurement tenders. 

The latest diagnostic tools would also cover hub and spoke arrangement which is a kind of cartelisation where vertically-related players act as a hub and place horizontal restrictions on suppliers or retailers. 

The diagnostic tools will provide a list of red flags to procurement officers that suggest the possibility of cartelisation. 

This, the sources said, would include things such as the same amount of earnest money deposit submitted by multiple bidders, same handwriting or other such similarities in the bidding documents, suspicious bidding patterns and relationship between bidders such as joint ventures. 

When suppliers engage in bid rigging, taxpayers’ money is wasted as the government pays more than the fair price. 

The Competition Act defines bid rigging as any agreement between enterprises or persons engaged in identical or similar production or trading of goods or provision of services which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding. 

Procurement of goods and services is carried out by various ministries, departments, municipal and other local bodies, statutory corporations and public undertakings both at the Centre and the state level.

 

Keeping check

 

*  Diagnostic tools to provide list of red flags to procurement officers

 

*  This would include parameters such as suspicious bidding patterns and similarities in documents

 

*  The toolkit will be launched on Tuesday along with FAQs on combinations

 

*  It will also cover hub and spoke arrangement