Case Study

Example: South Africa

This case study illustrates how South African competition authorities used recommendations submitted to policymakers to shape Public Procurement policy such that the outcome mitigated the potential for bid rigging and collusion amongst firms that could infringe on the benefits of competition experienced by markets and consumers.

Public Procurement

In January 2010 the Competition Commission made a submission to the National Treasury on the use of the Certificate of Independent Bid Determination in the procurement process.

The Certificate requires all bidders to disclose all material facts about any communication that they have had with competitors pertaining to the invitation to tender. The Certificate will assist purchasers by informing bidders about the illegality of bid-rigging and provide for additional penalties.

The objective of the Commission’s submission was to influence National Treasury’s procurement policy to address the gaps that had been identified by adopting the necessary measures to prevent bid-rigging before bids are submitted.

In response to the submission, the National Treasury developed a practice notice in terms of section 76(4) of the Public Finance Management Act, comprising an instruction to accounting officers in all spheres of government to ensure compliance with section 4(i)(b)(ii) of the Competition Act. In addition, the general conditions of contract were also amended to include clause 34, which covers the prohibition of restrictive practices. Clause 34 provides for the prohibition of collusive tendering and the referral of bidder(s) who have engaged in collusive tendering to the Commission for investigation and the possible imposition of administrative penalties.

In addition to the submission, the Commission undertook supplementary engagements with Government - the Commission provided training to procurement officers from the private and public sectors on the prevention, detection and reporting of bid-rigging during the tendering process and the Commission held a series of workshops for provincial sphere of government.