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Tuesday, 7 December 1965

Dr MACKAY (Evans) (12:33 PM) .There is one form of collusive tendering which I believe is not covered by this clause as it stands. It is the practice, which is not infrequent, of making cover bids. It works in this fashion: Company A rings Company B and says: " Are you putting in a tender for such and such a job?" Company B says: " No, we do not intend to do so." Company A says: " Well, we suspect that we may be the only company tendering for this particular job and the requirement of the authorities necessitates there being more than one tender. Will you put a cover bid in for us?" Company B says to Company A: "Well, what is the price of your tender?" Company A says: " It is £35,000 or £350,000", whatever the case may be. The other company says: "Very well, we will put in a tender at an escalated price of £380,000." It does this to enable an apparent competition to exist. I ask the Attorney-General (Mr. Snedden) whether, in the wording of the clause as it stands, such a practice could be brought within the scrutiny of the Tribunal. Clause 85 (1.) (b) provides that " collusive tendering agreement" includes - any other agreement that has the purpose or effect of preventing or restricting competition . . .

That paragraph is pointed in the direction to which I have alluded. My thought is that other words should be added such as " or concealing an absence of effective competition." A further paragraph, (c), could be added to sub-clause (2.) to provide that a person who makes a tender as a result of collusion to give the appearance of competition to assist another tenderer to tender for a contract is guilty of an offence against this section. That would cover this particular form of practice, which I think is not in the public interest but which is not unknown in business circles. I believe that the clause as it stands is not adequate.

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