Bed rigging, the practice whereby few suppliers and contractors collude to fix, control or maintain prices is known to distort the tendering and bidding process.
The Namibia Competition Commission (NaCC) recently held a workshop aimed at raising awareness about bed rigging, also known as collusive tendering.
The Windhoek workshop successfully dealt with the prevention and detention of suspicious collusive tendering and managed to encourage stakeholders towards collaborated initiatives.
Director of Economics and Sector Research Dr Michael Humavindu stressed during the workshop that fighting cartel and bid rigging is a top priority of most competition authorities as it tends to have an enormous effect on the economic costs.
He urged collaboration between public procurement agencies and competition authorities to help fight that crime.
In a research paper ‘The role of the Namibian Competition Commission in promoting competition in public procurement’; co-authored by NaCC researcher Josef Hausiku and senior economist Bridget Dundee, collusive tendering is defined as a particular form of coordination between firms which can adversely affect the outcomes of any sale or purchasing process in which bids are submitted.
“The most common forms of collusive tendering include cover bidding where, for example, dishonest bidders can agree to submit courtesy or phony bids, which are higher than the bid of the designated winners (or bids who do not meet all technical requirements) thus creating an appearance of genuine competition, known as cover bidding,” the researchers note.
The document furthers that in bid rotation schemes members of the agreement continue to bid, but take turns to submit the lowest bid and thus win the tender.
Collusive tendering is prohibited in Namibia and can be investigated and prosecuted under the competition Act 2 of 2003.
“The preamble of the Act recognises that Namibia’s discriminatory past resulted in skewed distribution of ownership and control, inadequate restraint on anti-competitive trade practices and unjust restrictions on free participation in the economy by all Namibians. It acknowledges that the economy should be open to greater ownership by a greater number of Namibian and that a credible competition law and effective structures to administer the law are necessary for an efficient functioning in economy.”
The NaCC, established in 2009 is an autonomous body responsible for administering and enforcing the provisions of the Act with regard to all economic activity within Namibia or having effect in Namibia.
The workshop agreed that a fair public procurement process will enable economic transformation and foster Small and Medium Enterprises (SME) linkage to the bigger economy.
“The NaCC has adopted a proactive approach in the detection and prevention of collusive tendering in Namibia. However, there is a greater need for collaboration between procurers and the NaCC to ensure that through public procurement competitive impacts are evaluated toward attainment of pro-competitive benefits for the economy.”
Another aspect that was stressed on by the attendees regarding tender awarding was the fact that tenders are continuously being awarded to ‘big-name’ players.
The workshop thus requested NaCC to find ways to bring out regulations that would allow SMEs to get tenders allocated exclusively to them.
Corporate Communication Officer Dina Gowases admits that the NaCC is looking at engaging big players into collaborating with SMEs in bidding for tenders.
She adds that although NaCC does not have much say in the tender board, they are planning in the future to work with them to promote tender awarding to SMEs.
The workshop coincided with the consumer week.
This comes after NaCC recently engaged other regulators; the Communication Regulatory Namibia (CRAN), Namibia Financial Institutional Supervisory Authority (NAMFISA) and the Bank of Namibia (BoN), Electricity Control Board (ECB).
“NaCC views the promotion of competition culture within a country as a vital component in creating a successful market economy. It is imperative that the public has a fair understanding of the benefits of competitions and as such provide broad based support for a strong competition policy.”
According to Dr Humavindu there is a need to raise more awareness about the mandate of NaCC and also encourage students to visit the NaCC library for more information.
“There is a limited public understanding about the role of different regulators and how they interact with each other. Thus the workshop aimed at creating awareness about such roles through the media,” he said.
This week NaCC chief executive officer Mihe Gaomab II will make a detailed presentation at the Polytechnic dubbed, “The Victory over Walmart for Namibian economy to flourish.”
Last year a lengthy legal battle between Namibia led by then Minister of Trade and Industry Dr Hage Geingob and NaCC against Walmart led to the merger between Wal-Mart and Massmart being approved with conditions.
The conditions for the merger were that the new merged entity ensures that there are no retrenchments based on its operational requirements in Namibia and resulting from the transaction, for the period of two years from the effective date of the transaction. Gaomab II is expected to lecture on the developments and the interpretation at 18H00 this Wednesday.