Warning over ‘cartel conduct’ in public service as department processes raise red flag

By Jackson Graham

Tuesday November 2, 2021

Rod Sims
The ACCC recently uncovered departmental processes contemplating cooperation between competing businesses on government tenders. (AAP Image/Mick Tsikas)

Public servants are being warned to look out for bidders colluding during government procurement processes, as the competition regulator finds a red flag in a department. 

The Australian Competition and Consumer Commission is raising concerns public servants and businesses might not be aware of the risks of illegal activity known as “cartel conduct” amid the federal government publishing more than $50 billion in tenders a year.

The ACCC recently uncovered departmental processes contemplating cooperation between competing businesses on government tenders but has declined to comment further on which department was involved. 

Cartel conduct occurs when businesses agree to act together instead of competing with each other.

ACCC chair Rod Sims said actions that encouraged businesses to discuss their bids with each other or agree about who will bid for a particular tender would likely amount to cartel conduct. 

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,” Sims said. 

He said not only was the behaviour against the law, but in government, procurement would often lead to higher costs for taxpayers. 

“Competition to supply governments with goods and services is crucial in ensuring value for money,” Sims said. 

The ACCC has a guide on cartel deterrence and detection, and Sims said public servants should proactively review procurement processes and identify and remedy any anti-competitive elements. 

In a separate matter which is before the courts, the ACCC in May instituted federal court proceedings against a company and its director for allegedly attempting to rig a bid in connection with a tender by the National Gallery of Australia.


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