Warning on cartel conduct risk in public sector tenders

1 November 2021

The ACCC is warning public sector agencies to be alert to the potential for collusion between bidders during procurement processes, following a recent ACCC investigation where departmental processes contemplated cooperation by competing businesses on government tenders.

Public sector procurement is a multi-billion-dollar sector which makes a vital contribution to the Australian economy and the welfare of Australian citizens and residents.

However, based on recent experiences, the ACCC is concerned that some public servants and businesses may not be sufficiently aware of the risk of breaching cartel laws during the procurement process.

“Cartel conduct by businesses tendering in a public sector procurement process is illegal, just as such conduct is illegal in the context of a private sector tender,” ACCC Chair Rod Sims said.

“Encouraging businesses to discuss their bids with each other, or to make agreements about who will bid for a particular tender, is likely to amount to cartel conduct which is against the law.”

“Cartel activities may start with a small encouragement or an innocent remark, but this can create an environment that enables, condones or facilitates collusive conduct between competing firms,” Mr Sims said. 

“Competition to supply governments with goods and services is crucial in ensuring value for money for taxpayers. Cartel conduct in government procurement is therefore not only against the law, but will often result in taxpayers paying considerably more for goods and services,” Mr Sims said.

Procurement professionals in the public sector are encouraged to familiarise themselves with an ACCC guide on cartel deterrence and detection.

“It is also important for prospective bidders to be aware of their obligations and comply with the law,” Mr Sims said.

“We encourage public sector procurement professionals to proactively review their procurement processes and identify and remedy any potentially anti-competitive elements in any procurement procedures, policies or guidelines.”

The ACCC cannot make further comment on the circumstances of the recent investigation.

In a separate matter, the ACCC previously instituted proceedings in the Federal Court against a company and its director for involvement in the alleged attempt to rig a bid in connection with a tender by the National Gallery of Australia. That matter remains before the Court.

Background

Businesses providing goods and services under public sector procurement must not engage in conduct which is in breach of the competition provisions in the Competition and Consumer Act.

Cartel conduct occurs when businesses agree to act together instead of competing with each other. This agreement is designed to drive up the profits of cartel members while maintaining the illusion of competition.

In 2019-20, there were 81,174 contracts for the Federal Government published on AusTender with a combined value of $53.9 billion.

Note for editors

Cartel behaviour, which involves businesses agreeing to act together instead of competing fairly, breaches the Competition and Consumer Act. Cartel conduct can involve price fixing, bid rigging, market sharing, and controlling the amount of goods or services available.

Anyone with information about any cartel conduct in another industry can anonymously report cartel conduct via the ACCC website.

Anyone who thinks they may be involved in cartel conduct can also apply for immunity from prosecution in exchange for helping with the ACCC’s investigations by contacting the ACCC cartel immunity hotline on (02) 9230 3894.  

Release number: 
169/21
ACCC Infocentre: 

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Media enquiries: 
Media Team - 1300 138 917, media@accc.gov.au

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