Bidding rule tweaked to strengthen process

The Competition Commission has streamlined an ordinance that will require bidders to declare their beneficial owners when applying for tenders so procurers can determine if the bids come from the same companies.

The commission revised its "noncollusion clauses" - first published in 2017 - to strengthen protection for procurers against attempts to undermine competition.

Under the Competition Ordinance, bid-rigging, market sharing and price-fixing are serious anti-competitive conducts.

If these acts occur in the procurement process, procurers will end up paying more than the competitive price for goods and services.

The revised clauses comprised of model noncollusion wordings that procurers can include in an invitation to bid, a model certificate for bidders to sign in their submission to declare that the offer was developed independently and a user's guide on such documents.

The clauses affirm prohibition against anti-competitive acts - as well as the consequences of such behaviors - and provide a clear and straightforward contractual remedy for procurers if these clauses have been breached.

Bidders are now required to identify their beneficial owners so procurers can see if there are links between companies or if offers are coordinated.

While having a common beneficial owner does not necessarily breach the ordinance, the commission considered that such a situation misleads the impression of the level of competition in a bidding process.

In case companies disclose a common owner to another participant in the procuring process, procurers can decide how to respond based on their procurement policies.

A spokesman for the commission said the model "noncollusion clauses" have been increasingly used by bidders and has helped in safeguarding their purchasing process.

"By further requiring bidders to disclose beneficial ownership, procurers will be provided with a crucial piece of information when assessing the potential competitiveness of the bids," he said.

"We encourage all procurers to incorporate the revised set of 'noncollusion clauses' in their invitations to bid and formal contracts."

He also reminded procurers to stay vigilant and report any suspected anti-competitive conduct to the commission.