Give Competition Commission powers to fine tampering with tenders
Loading player...
Reports of inflated bids to supply personal protective equipment (PPE) to the government during the national lockdown raise concerns that competition in a wide range of critical markets in SA is being disrupted by fraud, nepotism and corruption.
Tenders are among the most powerful means to foster efficient markets and can be used by purchasers in both the public and the private sectors. The tender process allows a purchaser to obtain a range of competitive quotes for goods or services, and to select suppliers who offer the best quality, at the cheapest price. A transparent, well-run tender process can ensure that the state gets the best value for its scarce resources.
The Competition Act supports the competitive tender process by prohibiting any form of “collusive tendering” by competitors. The Competition Commission can investigate any alleged understanding between competing suppliers to rig their tender bids, and if the Competition Tribunal finds that suppliers have contravened the Competition Act they can be fined up to 10% of their turnover, even for a first-time contravention.
Since May 2016 section 73A of the Competition Act has also allowed for any person “engaged or purporting to be engaged in a firm in a position having management authority within the firm” to face criminal charges if they either “cause” a firm to engage in collusive tendering, or knowingly acquiesce in this kind of collusion. Fines of up to R500000 and prison sentences of up to 10 years — or both — may be imposed.
The Competition Act regulates agreements or understandings among competing bidders (or potential bidders) in the tender process — it does not prohibit other forms of conduct by individuals or companies that distort or subvert effective competition in a tender process. This is dealt with in other legislation, such as the Prevention and Combating of Corrupt Activities Act.
Thus the Competition Commission cannot prosecute criminal cases against individuals or companies itself, even if it obtains relevant evidence in the course of its investigations into collusive tendering: in terms of the constitution this remains the responsibility of the National Prosecuting Authority (NPA). Despite the multiple institutions that play a role in enforcing this legislation (including the police, NPA, Asset Forfeiture Unit and the Special Investigations Unit), successful criminal prosecutions have been few and far between. These institutions are underresourced and overburdened, as are our criminal courts.
One solution might be to amend the Competition ...
Tenders are among the most powerful means to foster efficient markets and can be used by purchasers in both the public and the private sectors. The tender process allows a purchaser to obtain a range of competitive quotes for goods or services, and to select suppliers who offer the best quality, at the cheapest price. A transparent, well-run tender process can ensure that the state gets the best value for its scarce resources.
The Competition Act supports the competitive tender process by prohibiting any form of “collusive tendering” by competitors. The Competition Commission can investigate any alleged understanding between competing suppliers to rig their tender bids, and if the Competition Tribunal finds that suppliers have contravened the Competition Act they can be fined up to 10% of their turnover, even for a first-time contravention.
Since May 2016 section 73A of the Competition Act has also allowed for any person “engaged or purporting to be engaged in a firm in a position having management authority within the firm” to face criminal charges if they either “cause” a firm to engage in collusive tendering, or knowingly acquiesce in this kind of collusion. Fines of up to R500000 and prison sentences of up to 10 years — or both — may be imposed.
The Competition Act regulates agreements or understandings among competing bidders (or potential bidders) in the tender process — it does not prohibit other forms of conduct by individuals or companies that distort or subvert effective competition in a tender process. This is dealt with in other legislation, such as the Prevention and Combating of Corrupt Activities Act.
Thus the Competition Commission cannot prosecute criminal cases against individuals or companies itself, even if it obtains relevant evidence in the course of its investigations into collusive tendering: in terms of the constitution this remains the responsibility of the National Prosecuting Authority (NPA). Despite the multiple institutions that play a role in enforcing this legislation (including the police, NPA, Asset Forfeiture Unit and the Special Investigations Unit), successful criminal prosecutions have been few and far between. These institutions are underresourced and overburdened, as are our criminal courts.
One solution might be to amend the Competition ...