1. PUBLIC PROCUREMENT &
BID-RIGGING
Presented By:
Suneeta Mohapatra
Roll No. 81003150006
LLM, NMIMS,
School of Law

2. PUBLIC PROCUREMENT
 Public procurement in India is a major
activity within the Government, not
merely for meeting its day today needs but
also for underpinning various services that
are expected from the government e.g.,
infrastructure ,national defence and
security, utilities, economic development
,employment generation social service and
so on.

3. PUBLIC PROCUREMENT CONTD....
 There is no single central body that is
dedicatedly responsible for defining procurement
policies and procedures. General Financial Rules
(GFR) 2005 is a voluminous document which
contains 293 rules, 16 appendices and a number
of forms for different purposes. In addition, a set
of guidelines is issued by Ministry of Finance
(Manual on Policy and procedures on Purchase
of Goods). The CVC has also issued numerous
guidelines and instructions dealing with
model procurement practices.

4. BID RIGGING :
 The explanation to sub-section (3) of
Section 3, of the Act defines “bid rigging”
as “any agreement, between enterprises or
persons referred to in sub-section (3)
engaged in identical or similar production
or trading of goods or provision of
services, which has the effect of
eliminating or reducing competition for
bids or adversely affecting or manipulating
the process for bidding.”

5. BID RIGGING IS ANTI-COMPETITIVE
 Bidding, as a practice, is intended to enable the
procurement of goods or services on the most
favourable terms and conditions. Invitation of
bids is resorted to both by government (and
government entities) and private bodies
(companies, corporations, etc.). But the objective
of securing the most favourable prices and
conditions may be negated if the prospective
bidders collude or act in concert. Such collusive
bidding or bid rigging contravenes the very
purpose of inviting tenders and is inherently
anti-competitive.

6. ANTI-COMPETITIVE AGREEMENT
(SECTION-3)
 (3) Any agreement entered into between
enterprises or associations of enterprises or
persons or associations of persons or between any
person and enterprise or practice carried on, or
decision taken by, any association of enterprises or
association of persons, including cartels, engaged
in identical or similar trade of goods or provision of
services, which—
 (a) directly or indirectly determines purchase or sale
prices;
 (b) limits or controls production, supply, markets,
technical development, investment or provision of
services;

7. ANTI-COMPETITIVE AGREEMENT
(SECTION-3) CONTD....
 (c) shares the market or source of production or
provision of services by way of allocation of
geographical area of market, or type of goods or
services, or number of customers in the market or
any other similar way;
 (d) directly or indirectly results in bid rigging or
collusive bidding, shall be presumed to have an
appreciable adverse effect on competition:
Provided that nothing contained in this sub-section
shall apply to any agreement entered into by way of
joint ventures if such agreement increases
efficiency in production, supply, distribution,
storage, acquisition or control of goods or provision
of services.

8. COMPETITION CONCERNS ARISING OUT OF
ANTI-COMPETITIVE CONDUCT OF BIDDERS
 Market Sharing and Cartel formation
 Bid rigging and Collusive bidding
 Abuse of Dominance
 Information asymmetry and its impact on
Competition

9. COMPETITION CONCERNS ARISING OUT OF
ANTI-COMPETITIVE CONDUCT OF BIDDERS
CONTD....
 Limited/Single Tender Enquiry
 List of Registered Vendors
 Bureaucratic Hassles and Complex
Procedures

10. INQUIRY INTO BID RIGGING
In exercise of powers vested under Section
19 of the Act, the Commission may
inquire into any alleged contravention
under subsection (3) of Section 3 of the
Act that proscribes bid rigging. The
Commission, on being satisfied that there
exists a prima facie case of bid rigging,
shall direct the director general to cause an
investigation and furnish a report.

11. INQUIRY INTO BID RIGGING CONTD
The Commission has the powers vested in a
Civil Court under the Code of Civil Procedure in
respect of matters like summoning or enforcing
attendance of any person and examining him on
oath, requiring discovery and production of
documents and receiving evidence on affidavit.
The director general, for the purpose of carrying
out investigation, is also vested with powers of
civil court besides powers to conduct ‘search and
seizure’.

12. MARKET STRUCTURE AND REPORTED
COMPETITION ISSUES
 Market structure of public procurement in India
is heavily dependent upon procurement by the
Central Government and State Government
ministries, their departments and all statutory or
public authorities. Given the volume and
quantum of their summed up procurement
capacity, the market structure of public
procurement is of a very big magnitude and has
competitive impact on the overall market of
goods and services procured.

13. MARKET STRUCTURE AND REPORTED
COMPETITION ISSUES CONTD
 Public Procurement in India is in its majority
done by Public Sector Enterprises. These PSEs
have been said to be the victims of domestic and
international cartels, which often reflects
monopolistic behaviour of the suppliers in the
market who co-ordinate the production to
maintain high level of prices. In the past, such
behaviour has been noticed in sectors like
Fertilisers, Sugar, Wheat, Pulses, and
Construction Material etc.

14. COMPETITION ISSUES
 The constitutional mandate with respect to
Article 299 and Article 14 has requires the
executive to follow equality clause while
granting contracts.
 Nagar Nigam, Meerut v. Al Faheem Meat
Exports Pvt. Ltd & Ors
 The award of Government contracts through
public-auction/public tender is to ensure
transparency in the public procurement, to
maximise economy and efficiency in
Government procurement,

15. COMPETITION ISSUES CONTD....
to promote healthy competition among the
tenderers, to provide for fair and equitable
treatment of all tenderers, and to eliminate
irregularities, interference and corrupt
practices by the authorities concerned.
This is required by Article 14 of the
Constitution.

16. PRINCIPLES DEVELOPED BY THE SUPREME
COURT ON PROCUREMENT BY PUBLIC
AUTHORITIES
 Government organizations are not allowed to
work in secrecy in dealing with contracts,
barring rare exceptions.
 Reasons for administrative decisions must be
recorded, based on facts or opinions of
knowledgeable persons again based on facts.
 Adequate publicity is essential.
 Officers engaged in public procurement have to
perform fiduciary duty.
 There has to be fair play in the actions for
procurement.

17. CASES:
 Raunaq International Limited v. I.V.R.
Construction Ltd. & Ors.
 G.J. Fernandez v. State of Karnataka
 The Commonwealth Games 2010
 The Monopoly Cotton Procurement
Scheme

18. CONCLUSION
 It is worthwhile to point out that public
authorities might be required at times to act in a
way which appears to be anticompetitive but for
reasons of governance. Example may be taken
from PSEs or Government Companies, such
companies or enterprises may enter into long
term exclusive agreements denying market
access to a number of enterprises, it may also be
found that price of procurement is often higher
than price in a competitive market.

19. CONCLUSION CONTD....
 As part of the conclusion, after analysing the
entire gamut of procurement and studying the
framework of Competition Act, 2002 and other
relevant legislations pertaining to public
procurement in India, it may be stated that the
Competition Act, 2002 does not give a
mandamus type of remedial authority to the
Competition Commission of India. Thus at the
most Competition Commission can go for
vigorous advocacy and convince States or
Central Government to review the legislations
causing anticompetitive impact on the market.
The following might be very effective part of
competition advocacy in public procurement
cases as well:

20. CONCLUSION CONTD....
 persuading public authorities not to adopt
unnecessarily anticompetitive measures and help
them to clearly delineate the boundaries of
economic regulation.
 increasing awareness about the benefits of
competition, and of the role of competition law
and policy in promoting and protecting welfare,
enhancing competition among PSEs,
Government Companies, and Departments.
 wherever possible, competition awareness must
reach among economic agents, public
authorities, the judicial system and the public at
large.