Bid-rigging and gun jumping targeted in new legislation

The State’s main competition watchdog and the telecom regulator are to be given new powers to tackle the problem of “bid-rigging” which a senior official admitted was a problem in the procurement process for valuable State contracts.

The Competition (Amendment) Bill 2021 is designed to give effect to EU legislation on tackling cross-border, anticompetitive practices as well granting additional powers to the Competition and Consumer Protection Commission (CCPC) and ComReg.

They include allowing the CCPC to carry out covert audio and video surveillance on individuals suspected of operating cartels.

The Bill also provides for allowing the commission and ComReg to conduct unannounced inspections of premises and to impose non-criminal financial sanctions for breaches of EU competition law.

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The proposed legislation will create the specific offence of “bid-rigging” which is regarded as a form of cartel behaviour.

A senior official in the Department of Enterprise, Trade and Employment, Clare McNamara, said bid-rigging enabled companies to extract a higher price for the work as rival bidders that agreed to lose would submit inflated bids or not submit a bid at all.

Difficulty

Addressing the Oireachtas Committee on Enterprise, Trade and Employment on Tuesday, Ms McNamara said the CCPC has asked for bid-rigging to be made a specific offence in criminal law. The commission said it had faced difficulty in the past in successfully prosecuting firms suspected of bid-rigging as it was regarded as beyond the existing scope of anti-competitive practices as defined under legislation.

Ms McNamara said it was difficult to quantify the impact of bid-rigging to date and how much money might be saved by the introduction of the legislation.

She acknowledged that people taken to court in the past had got “a slap on the wrist”, something people breaching competition law had factored into the benefits of what they were doing.

The new Bill also proposes to give powers to the CCPC to tackle “gun jumping”, where parties involved in proposed mergers or acquisitions proceed with a deal without waiting for formal approval from the competition commission.

At the moment, only the DPP is allowed to prosecute suspected cases of "gun jumping". Ms McNamara said the proposal was designed to reduce the burden on the DPP, while also allowing for greater enforcement of any incidents of gun jumping.

The committee heard that plans to allow the CCPC to intercept and record electronic communications of individuals engaged in anti-competitive practices was necessary as cartels had become more sophisticated in the use of communications technology.

‘Restricted circumstances’

Ms McNamara said the CCPC currently had the power to obtain metadata on communications, such as phone calls and text messages, but not the content of such communications.

She said it was envisaged that surveillance powers would only be used in “very restricted circumstances” and would always require a warrant from the courts.

The legislation also provides for the introduction of a leniency programme by the CCPC and ComReg to grant immunity to cartel operators who provide evidence on the activity of other cartel members.

Sinn Féin TD Louise O’Reilly welcomed the legislation, claiming there was a perception among the general public about the scale of white-collar crime and that the State was ignoring the problem.

She expressed hope that the legislation would make “a real and substantial difference”.

Ms O’Reilly said many TDs had heard complaints from small builders that bid-rigging was a problem with relation to large-scale State contracts. The Dublin Fingal TD said the issue had come to the fore in relation to the building of an unnamed hospital.