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Competition Act, 2002 and corruption control

By The Assam Tribune
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Tanuj Goswami

The wastage of public funds through well-orchestrated cartelization/ bid rigging has to be stopped and all such efforts have to be nipped in the bud so that economic regeneration through optimal utilization of scarce resources can be ensured, which ultimately result in value for money and economic efficiency.

To tag our nation as an abominably corrupt one is no doubt humiliating, but we are unlikely to shed this nauseating stigma in the foreseeable future. The Indian state if it wishes to be in the league of the best economies of the world has to endeavour to control the huge leakages in government procurement through the provision of the Competition Act, 2002 and thereby to stop all antitrust activities.

As per a media report, the Government procurement in India in terms of our GDP is estimated to be nearly 30%, so anyone can well imagine the stupendous amount which tend to spike more if not arrested or controlled through rigorous enforcement of the Competition Act, 2002 combined with other anti-corruption and anti-graft laws of the nation. The country is proud of a huge array of law-enforcing agencies with laws/bylaws/regulation but the eradication of corrupt practices is still a daydream.

It has been observed that many government departments have been reckless in procurement of goods and services not giving a tinker’s damn about the cost and evil consequences of such conduct. The major government departments such as the defence, railway and telecommunication have reserved 50% of their budget for procurement of goods and services. Large chunk of the public fund which gets wasted in the process of the procurement by manipulative practices by different stakeholders in the market is said to be enough to wipe out the fiscal deficit of the country.

Meanwhile, with the operationalization of the Competition Act from 2009 along with advocacy drives by the Competition Commission of India across the country, both the public and private sectors operating in the market have been cautious of the regulatory regime making them to be competition compliant.

Many cases of anti-competitive practices having taken up suo motto or by way of reference received by the Commission under Section 19 of the Act and finally resolved with necessary orders, direction for violation of Sections 3 and 4 of the Act with slapping of hefty penalties on the service providers/suppliers/contractors for cartelization, bid rigging, etc., a reverberation of caution is sounded across different spectrum in the market. The government officials whose connivance has been established during the proceedings, complaints by the Commission can be forwarded to the government for departmental action.

So the government departments, the PSUs and other public institutions which have been engaged in economic activities need to pay due importance to the Competition Act, 2002, so that the competitors/bidders invited through competitive bidding process get the opportunities of being a potent market player fairly and freely with no scope of being obstructed in any manner which causes appreciable adverse effect on competition.

The bidding mechanism which is normally resorted to by the agencies of the government for supply of goods or provision of services on rates to be determined by the market forces are sometimes ignored and they prefer to follow the conventional mode of calling the favoured parties or competitors instead and thereby awarding the contract at a predetermined rate to the designated party.

In case of cartelization, the competitors coordinate amongst themselves and defraud the buyer by way of bid rigging/collusive bidding and thus the concerning stakeholders ‘share the spoils’ amongst themselves. This is a serious contravention of Sections 3 and 4 of the Competition Act and a punishable offence. A huge amount of public funds thus gets wasted and the unsuspecting consumers and honest taxpayers have to bear the cost of the evil act of the market players.

The public procurement policy needs to be transparent and accountable and every penny worth its value has to be utilized properly. So a competitive bidding process must be in place to ensure economic efficiency and a standard of governance in public expenditure. Further, promotion of public procurement in a fair and equitable manner ensuring free participation by all the competitors is the foremost and the appropriate way of competitive bidding process. It is most unfortunate that despite the process of e-tendering and e-payment being in place, the bogey of corruption is still rampant in many departments defeating the tall talk of competitive bidding.

So, prior to designing of a foolproof bid or identifying the need of the buyer, an extensive market study as well as consultation with different procurement agencies, their experience of bid process management, market dynamism and the conduct of the market players as to how they behave in the markets is an essential prerequisite. That unprecedented commercialization of markets through digitization and with the onset of e-commerce in national and international trade and business, a well-designed training mechanism for the procurement officials is considered paramount.

Usually, it is difficult to detect the bid rigging or cartelization which of late takes place in a very subtle manner, so as a pre-measure the competitors’ conduct should be under close scrutiny from earlier periods and steps like collecting information about their background, performance history, sharing of vital information and other details from all available sources will be of much benefit for the public procurement officials.

The wastage of public funds through well-orchestrated cartelization/ bid rigging has to be stopped and all such efforts have to be nipped in the bud so that economic regeneration through optimal utilization of scarce resources can be ensured, which ultimately result in value for money and economic efficiency.

The most positive fall out of an efficient and competitive bidding process has been the fruit of innovation, as more the innovation of products and services more the quality and consequently the consumers get the benefits of an affordable and reasonable price of product and services. The market efficiency fosters the investors’ confidence and a healthy atmosphere of competition lays the foundation for economic prosperity and is sure to propel the country’s projection for a 5-trillion-dollar economy in the next 7-8 years.

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