cci presentation7
TRANSCRIPT
BID RIGGING IN INDIA & A
COMPARATIVE STUDY WITH
REFERENCE TO FOREIGN
COUNTERPARTSBY: PARAM TANDON
BLS/LL.B 5th YEAR
Dr. D. Y. PATIL COLLEGE OF
LAW
MUMBAI
WHAT IS BID RIGGING ?Bid rigging is a form of fraud in which a commercial contract is
promised to one party even though for the sake of appearance
several other parties also present a bid. This form of collusion is
illegal in most countries. Bid rigging is anti-competitive because by
colluding, these bidders keep the bid amount at the
pre-determined level.
TYPES OF BID RIGGING
Bid suppression
Complementary bidding
Bid rotation
subcontracting
Market Division
Buy-Back
Phantom Bids
Harm to the Economy
Increases the cost to the consumers.
Potential wastage of tax payer can be significant
Pushes up contract prices by 20 to 30 percent
Harm to the Economy
Eliminating competitors
Reduction in quality standards.
Damage the credibility of
lending institutions, such as the World
Bank
DETECTING BID RIGGING
Receive identical bids or close amount of number from different
companies
There is some indication of a physical alteration of bids, particularly at the last minute
The range of bids shows a clear gap between the winner and all others
All companies submit high bids when the cost for work are less on
paper
Qualified bidders do not bid especially if they initially took steps
to bid
If a contract is re-bid because all initial bids are unacceptable, the
bidders come back in the same order or some bidders fail to re-
bid
WAYS TO REDUCE RISK OF BID RIGGING
• Develop prior information about the market
• Encourage participation in the procurement process
• Avoid predictability in tender process
• Reduce opportunities for communication among bidders
• Provide clear evaluating and award criteria
BID RIGGING– AROUND THE GLOBE
ESTIMATED PUBLIC PROCUREMENT LEVELS IN ASIA
PENELTY FOR BID RIGGING IN INDIA
THE COMPETITION ACT, 2002
IF SECTION 3(3)(d) VIOLATED
SECTION 27(b)
₹ PENALTY UPTO 10% OF AVERAGE TURNOVER OF 3 PRECEDING FINANCIAL YEARS
Section 190 of Enterprise Act 2002:1)A person guilty of an offence of Bid Rigging is liable— (a)on conviction on indictment, to imprisonment for a term not exceeding five years or to a fine, or to both;
(b)on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or to both.
PENALTY FOR BID RIGGING INUNITED KINGDOM
U.S.SHERMAN ACT PENALTIES FOR BID RIGGING
Fine up to $10,000,000 for corporations.
Fine up to $350,000 and/or 3 years in prison for individuals.
Responsible for restitution to victims.
Possible civil suits for up to 3x the amount of damages suffered.
According to Indonesia’s competition law,
• The Commission can impose civil fines up to
Rupiah 25 billion (US$2.7mn) for violations of
the law or criminal fines.
• up toRupiah 100 billion (US$2.3bn) and a prison
term of up to six months, as sanctions for bid
rigging.
BID RIGGING PENALTIES ININDONESIA
Participants in illegal bid rigging are sentenced to a maximum two-year prison term or fined a maximum Y2.5 million.
BID RIGGING PENALTIES IN JAPAN
ANTI-MONOPOLY LAW
• No limit on fines
• Jail term up to 14 years for
individuals(S. 47(2))
• Victims have a statutory right to
sue perpetrators to recover damages
caused by bid-rigging (s. 36)
• Criminal record may be registered
with the Canadian Police Information
Centre (CPIC)
PENALTIES FOR BID RIGGING IN CANADA
Maximum 10 % of WORLDWIDE TURNOVER
ENTERPRISE (any
entity)
PENALTIES
SECTION 4 AND 10 OFFENDERS
ENTERPRISEISE
PENALTIES FOR BID RIGGING IN MALAYSIA
Non-compliance has serious consequences:
• Fines up to 10% of annual worldwide turnover
• Liability in damages under national law
• Voiding of contract
• Criminal liability
• Substantial expenditure of time and money
• Bad publicity
• Investigations by other competition authorities
CONSEQUENCES OF BID RIGGING INEUROPEAN UNION
INDIA• MONETRY FINE• NO IMORISONMENT
U.S.
• MONETRY FINE
• IMPRISONMENT
U.K.• MONETRY FINE• IMPRISONMENT, OR BOTH
INDONESIA
•MONETRY
FINE
• IMPRISONMEN
T
JAPAN
•MONETRY
FINE
• IMPRISONMEN
T
CANADA
• MONETRY FINE( NO LIMIT)
• IMPRISONMENT• RECOVERY TO VICTIM
• CRIMINAL RECORD
MALASIA
•MONETRY FINE
• NO IMPRISONMENT
EU•MONETRY FINE
•CRIMINAL LIABILITY
BID RIGGING PENALTIES
COMPARISON
FINE