CCI bats for compliance in public procurement

Written by Ashish Sinha | New Delhi | Updated: Feb 25 2013, 07:24am hrs
Seeks alignment of existing procedures with competition laws

To ensure competition-compliant public procurement and concerned by growing instances of bid rigging/collusion, the Competition Commission of India (CCI) wants alignment of the existing procedures for public procurement with competition laws.

CCI also wants close cooperation among various stakeholders, such as the department of expenditure, central vigilance commission, comptroller & auditor general, CCI and large procurers like defence and railways, for the long-term development of competitive public procurement markets.

CCI said it wants auditors in government departments to sensitise themselves with anti-competitive practices. CCI has stressed on increasing competition in public procurement, but has pointed to its own recent orders where it had to impose penalty on violators.

In an internal communication, CCI has pointed that bid rigging in public procurement can cause serious economic harm as it increases prices artificially, lowers quality and leads to loss of taxpayers' money.

In India, Section 3 of the Competition Act, 2002, identifies bid rigging/collusive bidding as one of the horizontal agreements that could adversely impact competition in the concerned market and, hence, prohibits it. The commission has imposed severe penalty in several instances in recent times.

In the last few months, CCI has found violations in procurements and fined several companies like LPG Manufacturers (R165.59 crore), Aluminium Phosphide Tablet Manufacturers (R317.91 crore), among others.

In the communication, CCI chairman Ashok Chawla said the government, as a procurer, has substantial 'buyer power', which must be used for the benefit of the public at large and not to the detriment of the competition in markets.

The procurement agencies have to be alive to market information and optimise the bidders to ensure healthy competition, said Chawla. The CCI chief said procurement officials need to be aware of the technical specifications and tender process so that they could ensure evaluation of bidding process aligns to competition compliant public procurement.

CCI has observed growing instances of collusive bidding or bid rigging in public procurement in the recent times. Bid rigging, according to CCI, is a kind of fraud where bidders agree to eliminate competition and fix prices in the procurement process. Experts said, all over the world, bid rigging is treated with severity in the law. In many countries, including the US, bid rigging is a criminal offence.