Treasurer Daniel Mookhey said the move against “bid rigging” was designed to provide the best outcome for taxpayers. Photo: Daniel Mookhey MLC, Facebook.
The NSW Government and the Australian Competition and Consumer Commission (ACCC) are teaming up to crack down on illegal “bid rigging”, whereby companies collude to raise prices of government contracts.
Collusion and bid rigging are processes by which companies work together to raise their prices or lower the quality of their services offered in public tenders. The practice is illegal but difficult to identify and punish.
New efforts from the government seek to crack down on the activity. This united effort between the government and the watchdog will use AI to process data and find opportunities for ACCC referral for legal action.
The announcement is an outcome of talks at the recent Federal Treasurer’s Economic Reform Roundtable.
The ACCC and the NSW Government will share tender data and information to find suspicious patterns that may point to collusion between companies bidding for tenders.
AI will be used to process enormous quantities of contract documents, data, submissions and other relevant information the government receives during the procurement process.
The government has labelled companies’ efforts to “bid rig” as “cartel behaviour”.
“We’re partnering with the ACCC so we can deploy world-leading technology to deter would-be conspirators,” NSW Treasurer Daniel Mookhey said.
“There are many good operators in NSW – and those are the companies we want to do business with.
“This agreement is designed to neutralise bid rigging and other cartel conduct in order to get the best outcomes for NSW taxpayers.”
A global study by the Organisation for Economic Co-operation and Development (OECD) estimates that improved competition and an end to collusion could save taxpayers as much as 20 per cent on contracts with third parties.
Suppliers found to have engaged in this practice could be prosecuted by the ACCC and suspended from consideration regarding future contracts with the NSW Government.
The ACCC has taken legal action against such cartels before to protect the principle of competition.
More than $42 billion is spent each year by the government on goods, services and construction.
“The ACCC looks forward to new data-sharing arrangements with the NSW Government, which will help identify suspicious patterns in procurement indicating collusion and cartel conduct between tenderers,” ACCC chair Gina Cass-Gottlieb said.
“We are committed to working with all levels of government to prevent government procurement processes from being the target and victim of cartel conduct.”
The crackdown’s ultimate aim is to deliver better projects for less-inflated prices, improve competition in the state and level the playing field for bidders.
In South Korea, a similar cartel-screening tool flags around 80 cases a month, and 26 investigations between 2018 and 2021 have led to fines totalling about $15 million.
