Wednesday, December 8, 2021

Bid-rigging to be criminalized

The Competition Authority’s Director of Legal and Enforcement, Duncan Morotsi has revealed that the Authority has made a recommendation to the government that bid-rigging should be criminalised.

As Morotsi explained to the Fourth National Competition Conference a fortnight ago, the Competition Act doesn’t criminalise bid-rigging in its current constitution. In a follow-up interview with Sunday Standard, he said that the Act focuses on companies and not individuals within such companies.

“The result is that real culprits go scot-free because the law doesn’t prescribe penalties for them,” said Morotsi, adding that the status quo doesn’t go to “the root of the problem” and makes it extremely difficult to stamp out bid-rigging.

Such realization compelled the Authority to make a recommendation for government to make it a criminal offence for any officer (“from the Director to the cleaner” in Morotsi’s words) to participate in bid-rigging. Morotsi’s recollection is that such recommendation was made in August last year, and the issue is now between the Authority, the Attorney General Chambers and the Ministry of Trade and Industry. He also reveals that a draft bill has been produced. The next step will be to take the bill to cabinet and later parliament.

According to Morotsi, some 55 percent of companies in Botswana survive on public procurement and the Authority’s observation so far is that “bid-rigging is a big problem” in central and local government as well as in parastatal organisations.

“It is all over,” he says.

He doesn’t attribute all of the problem to willful wrongdoing. The Authority only started operating in 2011 and finds itself having to wean businesspeople off anti-competitive practices that have long been considered perfectly legitimate. Morotsi says that to the unwitting, bid-rigging is an acceptable business practice because it has been around for ages.

“To these people this is how tenders have been won for years and they don’t think it is wrong to collude with somebody else to win a tender. Their understanding is that they are merely cooperating,” he adds.

Competition Authority officials have had to travel across the country to educate both government officials and members of the public about this practice.

Some other jurisdictions around the world have criminalised bid-rigging and the ones that Morotsi mentions are the United Kingdom, the United States and South Africa. With regard to the latter, he explains that although South African competition law criminalises bid-rigging, this provision is not yet being enforced.

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