Recently, the Competition Commission of India (CCI) published advocacy material in the form of a competition assessment toolkit intended for policymakers, researchers, analysts, and competition stakeholders; and a diagnostic toolkit for procurement officers. This furthers the CCI’s mandate of taking suitable measures for the promotion of competition advocacy, creating awareness and imparting training about competition issues.
Competition Assessment Toolkit
The primary objective of the CCI is to promote and sustain competition in markets. To achieve this, the CCI is creating an institutional framework for assessing both existing and upcoming select economic legislation and policies, from a competition perspective and sharing the findings with concerned stakeholders. To this end, an attempt has been made to provide such a framework through the ‘Competition Assessment Toolkit’.
Once provisions raising competition concerns are identified, they are redesigned in a manner that they do not inhibit competition in the market. This approach has been adopted from the Organisation of Economic Co-operation and Development’s assessment of legislation in countries such as Australia, Greece, Romania and Mexico and has resulted in substantial improvement in their gross domestic product.
India has a plethora of legislation and policies that govern the functioning of the markets at national and sub-national level. These encompass both the real sector (goods and services) and financial sector (money, banking, capital markets, etc.). Promoting a competition culture in the economy necessitates a comprehensive review of active laws and policies through a competition lens and bringing out necessary modifications if required. In furtherance of the same, the toolkit provides a standardised and simplified expression of principles that can be used for identifying competition concerns cutting across all sectors. It is relevant to note that these diagnostic tools are based on economic principles of market functioning reflected through market forces of demand and supply. The toolkit simplifies these economic concepts with illustrations.
Diagnostic Tool for Procurement Officials
Public procurement has an overarching economic and social significance in the context of good governance. It relates directly to the delivery of goods and services in various sectors such as health, education, defence, transport and infrastructure, etc. and affects Government efficiency.
The present procurement model in India is conducive to collusive tendering[1], which can impose heavy costs on the public exchequer by increasing the cost of procurement significantly. Further, such collusion raises anti-competitive concerns under the Act as coordinated action amongst applicants in a bidding process leads to eliminating or reducing competition for bids or adversely affects the process of bidding, also known as bid rigging or collusive bidding.
The “CCI’s Diagnostic Tool – Towards Competitive Tenders” has been designed to enable Government organisations to evaluate their procurement systems and facilitate them to make their procurement systems more competitive. The objective is to build capacity in government organisations on competition law.
The diagnostic toolkit is divided into four stages involved in a bidding process: planning, selection, execution and monitoring. It consists of sets of questions along with the gap analysis, improvement plans and references to past cases decided by the CCI. It also describes a range of methods for detecting suspicious conduct, to deal with it internally and to also file a reference with the CCI.
For further information, please contact:
Anshuman Sakle, Partner, Cyril Amarchand Mangaldas
anshuman.sakle@cyrilshroff.com
[1] Cartels in public procurement are common and the CCI in the recent past has established cartels in the following cases, In re: Cartelization in respect of tenders floated by Indian Railways for supply of Brushless DC Fans and other electrical items Suo Moto Case No. 03 of 2014 and In re: Cartelization in Tender Nos. 21 and 28 of 2013 of Pune Municipal Corporation for Solid Waste Processing Vs. Saara Traders Private Limited & Others Suo- Motu Case No. 03/2016
