‘Cartel’ practices behind rigged govt tender bids: MyCC

KUALA LUMPUR: Submitting multiple tender bids through “different” companies and sudden bid withdrawals are among the tactics used by enterprises engaging in cartels to rig the bidding process for government tenders, says the Malaysia Competition Commission (MyCC).

MyCC chief executive officer Iskandar Ismail also pointed out how more than 500 companies are being investigated for possible cartel practices across various sectors.

They include maintenance, construction and canteen tenders, among others.

Elaborating further on bid rigging tactics, Iskandar said some cartels increased the possibility of winning tenders by submitting multiple bids through a large number of companies.

The companies would all be in the same cartel.

Giving an example of 100 companies submitting their tenders for a project, Iskandar said if a cartel goes in with at least 50 companies, the probability of them winning is 50%.

“They create the illusion that there is competition,” Iskandar said.

He said some even went to the extent of having their friends or workers become directors or shareholders of companies.

“The workers may not even be in the know, and may just sign the tender forms. They may even win the tender.

“But when it’s time to meet the respective officials, someone from the company that lost the tender may come on their behalf, and when questioned, say they are representing the company that won,” he said.

Iskandar said there were also instances where several cartels were detected within a single tender.

“We have also stumbled upon situations where everyone (submitting the bids) are in a cartel,” he said.

Bid withdrawal was another tactic used, Iskandar said.

“For example, there are 10 companies bidding for a tender. Eight out of 10 companies may be in the cartel.

“If the cartel learns that three of the eight have been shortlisted, two may withdraw their bids once they know which company is poised to win the contract,” he said.

Some cartels even schemed to predetermine the winner, with one company in the cartel having the lowest prices when compared to the “competitors” that put up much higher prices.

Here, the services provided by all companies submitting the tenders will be the same, with the exception of one company having much lower prices.

Upon noticing a strong possibility of bid-rigging, Iskandar said the matter would then be elevated to the investigation level.

“Here, we start our dawn raids, statement taking, and request for information from certain parties, including the government,” he said.

He said that MyCC’s work didn’t stop at the investigation level, as it also goes on to deliver proposed decisions and later final decisions.

“That is why our cases take some time to complete. When I say complete, it’s not just on the part of investigations but up to the decision,” he said.

Iskandar said MyCC could also advise the government on competition matters.

The commission also has the power to carry out market reviews, which is an approach Iskandar described as a soft enforcement one.

“Here, we study the whole market and look at the regulatory, market and competition issues.

“We then come up with findings and recommendations and present it to the government,” he said.