Now you see it, now you don’t: MyCC CEO explains how industry ‘cartels’ play with govt tenders to create illusion of competition

Submitting multiple bids under “different” company names only to withdraw them suddenly is one of the tactics used by rogue enterprises that are part of an industry “cartel” to rig the bidding process for government tenders, The Star reported today.

(MMO) – Malaysia Competition Commission (MyCC) chief executive officer Iskandar Ismail told the newspaper that more than 500 companies are being investigated for possible cartel practices across various sectors that encompass construction to canteen tenders.

Elaborating, he claimed that these cartels increase the possibility of winning tenders by submitting multiple bids through a large number of companies — which would all be in the same cartel.

“They create the illusion that there is competition,” he was quoted as saying.

According to Iskandar, these cartel players even go to the extent of having their friends or workers named as directors or shareholders of these companies that exist in their network.

“But when it’s time to meet the respective officials, someone from the company that lost the tender may come on their behalf, and when questioned, say they are representing the company that won,” he was quoted as saying.

Iskandar claimed that there have been instances in which several cartels were detected for a single tender.

“We have also stumbled upon situations where everyone (submitting the bids) are in a cartel,” he said.

In addition, he said bid withdrawal was another tactic used, Iskandar said.

“For example, there are 10 companies bidding for a tender. Eight out of 10 companies may be in the cartel.

“If the cartel learns that three of the eight have been shortlisted, two may withdraw their bids once they know which company is poised to win the contract,” he was quoted as saying.

He said some cartels even schemed to determine the winner, with one company in the cartel having the lowest prices when compared to the “competitors” that put up much higher prices.

In this process, the services provided by all companies submitting the tenders will be the same, with the exception of one company having much lower prices.

Iskandar said that when MyCC suspects any possibility of bid-rigging, an investigation would be carried out to nip the problem in the bud.

“Here, we start our dawn raids, statement taking, and request for information from certain parties, including the government,” he was quoted as saying.

He said the reason MyCC’s work seems to take a long time to complete is because it also proposes recommendations and takes the final decision on action.

Iskandar said MyCC is empowered to carry out market reviews, which he described as a soft enforcement move.

“Here, we study the whole market and look at the regulatory, market and competition issues.

“We then come up with findings and recommendations and present it to the government,” he was quoted as saying.