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ÔThis volume is long overdue. Integrated legal and economic analysis of competition law is crucial given the nature of the sector. However to carry this off successfully, one either needs intensive editorial work to bring different teams together; or one has to rely on the few who master both economic and legal analysis to a tee. Stefan WeishaarÕs analysis not only looks at a stubborn issue in competition law. He does so in three jurisdictions, in detailed yet clear fashion, with clear insight and ditto conclusions. Over and above its relevance to academic analysis, this book can go straight into competition authoritiesÕ decision making, and therefore also in compliance and remediation advice.Õ Ð Geert Van Calster, University of Leuven, Belgium Cartels, Competition and Public Procurement uses a law and economics approach to analyse whether competition and public procurement laws in Europe and Asia deal effectively with bid rigging conspiracies. Stefan Weishaar explores the ways in which economic theory can be used to mitigate the adverse effects of bid rigging cartels. The study sheds light on one of the vital issues for achieving cost-effective public procurement Ð which is itself a critical question in the context of the global financial crisis. The book comprehensively examines whether different laws deal effectively with bid rigging and the ways in which economic theory can be used to mitigate the adverse effects of such cartels. The employed industrial economics and auction theory highlights shortcomings of the law in all three jurisdictions Ð the European Union, China and Japan Ð and seeks to raise the awareness of policymakers as to when extra precautionary measures against bid rigging conspiracies should be taken. Students and researchers who have a keen interest in the relationship between law and economics, competition law and public procurement law will find this topical book invaluable. Practitioners can see how economic theory can be used to identify situations that lend themselves to bid rigging and policymakers will be informed about the shortcomings of existing legislation from a legal and economics perspective and will be inspired by approaches taken in different jurisdictions.
Public procurement markets differ from all others because quantities do not adjust with prices, but are fixed by the bidding authority. As a result, there is a high incentive for organizing cartels (the price elasticity of demand is zero below the base price) that are quite stable because there are no lasting benefits for cheaters. In such circumstances leniency programs are unlikely to help discovering cartels. Since all public procurement cartels operate through some form of bid rotation, public procurement officials have all the information necessary (but they have to collect evidence on a number of bids) to discover them, contrary to what happens in normal markets where customers are not aware of the existence of a cartel. However in order to promote reporting, the structure of incentives has to change. For example, the money saved from a carte, should at least in part remain with the administration that helped discovering it and the reporting official should have some career advantages. In any case, competition authorities should create a channel of communication with public purchasers, so that they would know that informing the Authority on any suspicion they may have on bid rigging is easy and does not require them to provide a full proof.
'Corruption' in public procurement typically involves procurement decisions taken in favour of preferred bidders in exchange for improper compensation (the acceptance of bribes, for example), while supplier collusion refers to a type of cartel activity, in which firms rig their bids in a tendering process. Although these practices are distinct, they frequently occur together in the public procurement context, reinforcing one another. Combatting Corruption and Collusion in Public Procurement: A Challenge for Governments Worldwide examines the causes of corruption and collusion in the public procurement sphere, its resulting harm, and how states can best try to combat these practices. This book provides a legal, economic, and practical analysis of issues concerning corruption and supplier collusion in public procurement, both generally and in seven diverse and representative jurisdictions: the United Kingdom, the United States, Brazil, Hungary and Poland, Ukraine, and Canada. It encompasses a discussion of both 'generic' cross-jurisdictional issues and specific proposals for individual jurisdictions. It offers practical guidance on building robust regimes for combatting corruption and collusion in public procurement and how to bolster and improve them when they are faltering. The book stresses the need for a multi-faceted and joined-up approach to the problems, emphasizing the importance both of enhanced investment in the effective enforcement of anti-corruption and cartel laws and of increasing the resilience of public procurement systems to corruption and collusion through a range of measures. The relevance of the topic to the social and economic well-being of citizens and the survival of democratic governance is highlighted throughout the book. Pioneering and comprehensive, Combatting Corruption and Collusion in Public Procurement provides a pathbreaking analysis of a range of global issues, making it an essential read for scholars, lawyers, government officials and representatives of international and non-governmental organizations around the world.
'This publication is written to assist procurement professionals understand cartel behaviour. It reviews the provisions of the Trade Practices Act 1974 that relate to your procurement practices by describing several types of prohibited, anti-competitive behaviour that can target your purchasing budget. It considers some steps you might take to maximise competition and save your organisation money, while also disrupting the possible operation of cartels by suppliers.' -- p. 2.
This paper studies cartels in public infrastructure procurement and analyzes the conditions under which they succeed in generating rents. It first conceptualizes the interplay of the central actors of a procurement project, notably the contractor, the procurement agency, as well as the supervision and design consultants. By focusing on consultants, the framework includes important yet understudied actors in cartels that design tenders, evaluate bids, and supervise the implementation of projects. The paper then explores an original data set of infrastructure procurement contracts in Lebanon and analyzes the conditions under which powerful political elites can broker deals to overprice and/or over-spend contracts. To examine how cartels operate, the analysis identifies the political connections of contractors and consultants and classifies them according to their "quality” in terms of access to institutional functions of the implementing agency. The paper argues that design consultants serve as the lynchpin of the cartel by reducing transaction costs for searching, bargaining, and enforcing of corrupt deals.
"Public sector procurement agencies show how to identify and deal with illegal cartel behaviour. This CD describes cartel conduct; highlights the warning signs; gives brief instructions on what to do if you believe you have been subject to cartel conduct."--Disc.
This book offers a clear and structured examination of how joint bidding structures comply with competition rules in Europe. It explains how joint-bids could be considered as agreements aimed at distorting competition, the practice commonly referred to as bid rigging. The book demonstrates how the conclusion of joint-bid agreements could constitute grounds for exclusion from public procurement proceedings under Article 57(4)(d) of Directive 2014/24/EU.
We study the mechanics of cartel enforcement and its interaction with bidding constraints in the context of repeated procurement auctions. Under collusion, bidding constraints weaken cartels by limiting the scope for punishment. This yields a test of collusive behavior exploiting the counter-intuitive prediction that introducing minimum prices can lower the distribution of winning bids. The model's predictions are borne out in procurement data from Japan, where we find considerable evidence that collusion is weakened by the introduction of minimum prices.