The Competition and Consumer Commission of Singapore (CCCS) has issued an infringement decision (“Infringement Decision“) against three businesses engaged in the provision of maintenance services for water features. CU Water Services , Crystalene Product (S) and Crystal Clear Contractor (“Parties“) were directed to pay financial penalties totalling approximately S$420,000 for infringing section 34 of the Competition Act (Cap. 50B) and for participating in bid-rigging conduct relating to tenders called for the provision of maintenance services for pools, ponds, etc.
The Infringement Decision is the CCCS’s second infringement decision on bid-rigging this year (see our previous client update for more information on the first decision) and represents the CCCS’s increasing scrutiny on bid-rigging conduct.
In the CCCS’s media release relating to the Infringement Decision (see the CCCS’s media release for more information), the Chief Executive of the CCCS made it clear that bid-rigging is significantly harmful, and tenderers must independently prepare their bids and avoid coordinating their bids in an anti-competitive manner. Tenderers should reject any proposal to coordinate bids by publicly distancing themselves from such proposals. The CCCS also highlighted that any businesses engaged in a cartel should consider making a leniency application, to potentially benefit from a full/partial waiver of financial penalty.
In light of the above, businesses are reminded to implement competition compliance policies and practices, and regularly conduct competition compliance training and audits, to ensure that employees are well-versed on the out-of-bounds markers surrounding competition law. The CCCS has also made it clear that it will take swift and decisive action against any party engaged in hard-core cartel conduct such as bid rigging, price fixing, market sharing and production control.
When procuring goods and services, businesses should also consider implementing transparent procurement practices, including centralising the handling of tenders and calling of open tenders to encourage more participation from bidders (see the CCCS’s media release for more information on a previous bid-rigging decision).
For more information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.
In more detail
The CCCS commenced its investigation into the bid-rigging conduct in September 2017. After conducting unannounced inspections at the Parties’ premises, the CCCS promptly received leniency applications from Crystalene and Crystal Clear. The CCCS discovered that the bid-rigging conduct involving the Parties commenced in 2008.
In bidding for a project, the incumbent party (Party X) servicing the privately owned developer will typically request another party (Party Y) to submit a fake/cover quotation that is priced no lower than Party X’s quotation, in order to create the appearance that Party X’s services are more affordable. At times, when approached by a privately owned development, Party Y would discuss with Party X the price to quote before putting forth a quotation that is priced higher than Party X’s. Such bid-rigging conduct resulted in the lack of competitive pressure between the Parties and created the false impression that the quotations the Parties put forth were part of a competitive bidding process.
Taking into account the seriousness of bid-rigging, the CCCS took the position that the base penalties ought to start at the higher end when exercising its margin of discretion. However, given that Crystalene and Crystal Clear were leniency applicants who benefitted from reductions in financial penalties, the financial penalties that the CCCS imposed totalled to approximately S$420,000 only.