ACCC Warns Against Bid Rigging in Public Tenders

Jones Day

The Australian Competition and Consumer Commission ("ACCC") also cautions government agencies to be alert to potential bid rigging in the procurement process for public tenders.

The ACCC cautioned agencies of the Australian government (the "Government") to be on guard against "bid rigging" among competitors with respect to contracts with the Government ("public contracts"). Bid rigging occurs when multiple competitors agree to allow one competitor to "win" a bid or tender with the purpose of increasing the cartel members' profits, while maintaining a facade of competition.

Public contracts represent a significant commercial opportunity for companies in Australia. In 2020-21 alone, there were 84,054 public contracts with a combined value of AUD 69.8 billion. The Government recently declared its intent to consolidate its contracted services and technologies, which means there likely will be fewer public contracts, but those that remain will be more valuable.

The ACCC's recent prosecution of a building management company and its sole director prompted the ACCC's warning. According to the ACCC, Delta Building Automation and its director allegedly colluded with a competitor during a meeting at a Canberra café to fix the price of bids for the replacement and maintenance of a building management computer system at the Government's National Gallery of Australia ("NGA"). Although the NGA has not been implicated in those proceedings, the ACCC chairman expressed concern about public procurement officials becoming complicit, either intentionally or unintentionally, in bid-rigging conduct.

Consistent with the ACCC's focus on bid rigging in the public sector, especially in the construction industry, the ACCC announced in late October that it commenced proceedings against two Sydney-area roof tiling businesses, First Class Slate Roofing and Mr Shingles, for allegedly rigging a bid to supply slate roofing services to Wesley College at the University of Sydney, as well as a private bid in suburban Sydney. The ACCC's warning, its recent prosecution of Delta, and the tiling cartel proceedings demonstrate an enhanced regulatory focus on bid rigging in both public and private procurement processes.

Businesses involved in public sector tenders in Australia should expect the Government to strengthen the procedural requirements and oversight associated with tenders for public contracts. The ACCC has emphasised a particular focus on avoiding any "small encouragement[s]" or "innocent remark[s]" that potentially facilitate collusive conduct among competitors. Now is a good time to make sure that employees who participate in public bids in Australia are knowledgeable about the antitrust guardrails and the company's antitrust compliance policy. That is particularly important when companies are involved in a joint bid, an area of heighted ACCC regulatory interest.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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