Competition and Markets Authority (CMA) launches new e-tool to help procurers spot cartel behaviour

Together with Spend Network, the Competition and Markets Authority (CMA) has developed a ‘Screening for Cartels’ tool to help procurers screen their tender data for signs of cartel behaviour. Having a cartel in your supply chain can raise prices 30% or more.

A cartel will exist where bidders act together to fix their approach to bidding for contracts by, for example, fixing the prices each will bid, sharing information, agreeing not to bid or by making a poor quality or overpriced bid.

The tool consists of algorithms against which procurement data, specifically tender documentation and bid prices, can be tested; a positive result on one or more test could be cause for further investigation of that tender. The data from each tender is scored against each test, and each test is weighted.

Using a series of algorithms and the data from a tender, the tool tests for suspicious signs in three main areas, any or all of which may be suggestive of bid rigging:

  • number and pattern of bidders;
  • pricing; and,
  • document origin (including text and ‘typo’ similarities) and low endeavour submissions.

Any of these, or combinations of them, could be a sign of bid-rigging.

In developing the tool, the Spend Network used the data from over 100 tenders involving nearly 500 bids to refine the tests.  The combined and weighted total gives a ‘suspicion score’ for the tender exercise. Your results might something like this:

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Source: https://goo.gl/yybo5D

The pass/fail threshold and weighting of each test can be adjusted to more closely reflect your knowledge of the market, suppliers and bids or the value you place on a test. For example, if you have a procurement framework that might make three bidders or less (test 1) inevitable, you might adjust the weighting down to zero.

Whilst the tool does not prove the existence of a cartel, where it does identify suspicious signs procurement professionals can consider what further steps they may need to take and/or the questions and clarifications they may need to make with bidders before proceeding to a contract award.

The CMA also has a collection of information on bid-rigging detection and prevention, including:

  1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
  2. To report a cartel: email cartelshotline@cma.gsi.gov.uk or ring 0800 085 1664 or 020 3738 6888.
  3. Businesses found to have been involved in illegal cartels can be fined up to 10% of their annual turnover, individuals can face up to 5 years in prison and directors can be disqualified from holding director positions for up to 15 years. These can be reduced or eliminated altogether where a business or individual reports their involvement in a cartel and co-operates fully with the CMA’s investigation.
  4. The free tool is digitally signed with Microsoft Authenticode certification. It is available for download on GitHub, an open source development platform and is licensed under The Open Government Licence (OGL), which facilitates the re-use of a wide range of public sector information free of charge. To receive log in details to access the GitHub site, please email screeningforcartels@cma.gsi.gov.uk.