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how can bid rigging not be a crime?

Such anti-competitive acts should be considered a criminal offence and not treated lightly

THOMAS KOSHY

Two years after the relevant provisions of the Competition Act came into effect, the first case of anti-competitive bid rigging has resulted in a total of over $260,000 in civil penalties being ordered against six pest extermination companies.

Instead of submitting competing bids as would have been expected, the companies colluded to predetermine the successful bidder and contract price in various tenders.

Victims of the scam, which involved contracts totalling about $1 million, included public institutions such as Temasek Junior College and Alexandra Hospital.

Despite the civil penalties being imposed, four executives who were involved in the bid rigging were elected into positions of responsibility in the governing council of the Singapore Pest Management Association (SPMA) — one even retaining the post of president.

"After all, they did not commit a criminal offence," said a former SPMA president.

However, with its potential for causing substantial losses to victims and robbing public coffers, should bid rigging be treated lightly? To start with, is it acceptable that it is not a crime?

Though bid rigging is not a specific crime, it could very well fall within the Penal Code offence of cheating. After all, the consumer who calls for tenders is deceived into believing that there has been competitive bidding and thereby induced to award the contract to the "successful" bidder on terms likely to be disadvantageous to him or her.

Did the authorities consider whether criminal charges under the Penal Code would be preferred, or are investigations into bid rigging restricted to the Competition Act?

Section 10 of the Prevention of Corruption Act provides that a person who offers any gratification for withdrawal of a Government tender bid is commiting a criminal offence punishable by up to seven years' imprisonment. Is bid rigging any different from an offence such as corruption? Why then is there no separate crime for it?

Criminalisation should not be limited to tampering with Government tenders only in this particular way and should extend to private sector tenders as well.

Criminalising anti-competitive practices such as bid rigging would not be a particularly radical step. For example, in the United Kingdom, such a "cartel offence" was created with the passage of the Enterprise Act in 2002. Similarly, in the United States, it is also considered a crime.

If bid rigging can expose one to both civil penalties and criminal charges, it should be clarified whether a person who has had a civil penalty ordered against him can still be convicted of a criminal offence.

By way of comparison, the Securities and Futures Act (SFA) imposes civil penalties for insider trading and also made it a criminal offence.

The SFA specifically states that criminal charges cannot be preferred if a civil penalty has already been imposed. However, the Competition Act has no such provision.

Does this mean the situation is different for bid rigging and that both a civil penalty and criminal sanctions can be imposed?

Anti-competitive agreements can only lead to rising prices for consumers.

Imposing criminal sanctions for anti-competitive behaviour will help dispel any notion that it is a trivial matter and would send a clear message that such conduct will not be tolerated.

The writer was formerly a Deputy Public Prosecutor. These are his personal views.