Spotlight On Cartels: Bid Rigging Affecting Public Procurement

By: Alison Jones (Le Concurrentialiste)

Introduction

Competition agencies across the world are facing pressure to deal with an ever-expanding set of concerns. For example, many are being urged to do something about increasing consolidation and concentration in markets, to do something about the conduct of leading firms, especially those operating in the digital economy such as Google, Amazon, Facebook, and Apple (GAFA), to tackle ‘excessive’ prices charged in the healthcare and technology sectors and ‘collusion’ facilitated by algorithms, to ensure that their policies and enforcement priorities protect consumers and address sustainability issues and inequalities in society (including those arising from race and gender), and to consider how competition law should react to, and analyse, market adjustments that are occurring as a result of the Covid-19 pandemic.

These matters, many of which have been discussed in previous Concurrentialiste guest articles, are requiring competition authorities, legislators, policy-makers, antitrust practitioners, and academics to think deeply about a growing number of broad questions, including whether current competition laws are capable of reaching, or can be adapted to reach, all of the competition issues arising (especially in the digital economy), whether adjustments or amendments to antitrust laws are required, how antitrust policies should interface with other public policy objectives or whether competition laws need to be expanded to encompass a more egalitarian set of goals, and/or whether additional mechanisms including regulation or new market investigation tools are required to deal with the myriad of complex issues arising. Indeed, across the world, these discussions have sparked a proliferation of papers, investigations, inquiries, reports, and consultation processes debating whether, and if so how, competition law and policy should adapt. The complex issues and the mixed effects of much of the conduct under scrutiny, are understandably challenging policymakers and competition agencies and inevitably consuming much of the latter’s time, energy, and resources.

This short paper, however, seeks to serve as a reminder that competition agencies should not allow this plethora of important and taxing matters to distract them unduly from one of their other core missions – the detection, punishment, and deterrence of cartel activity (anticompetitive arrangements between competitors to fix prices, restrict output, to share or divide markets, or to rig bids), described in 2004 by the US Supreme Court as the ‘supreme evil’ of antitrust (see Trinko). Indeed, my recent research (with Robert Anderson, Professor William Kovacic, and Professor Caio Mario da Silva Pereira Neto) suggests that if competition agencies ensure that some of these resources are preserved for, and dedicated to, the fight against cartel activity, bid-rigging or collusive tendering, impacting on public procurement processes (the public purchasing of essential goods, services, and works), they can combat conduct which not only harms consumer welfare but which, in many cases, also produces much broader harm to a nation and its citizens, especially the more vulnerable and those most reliant on the public services procured…

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