The Competition Commission revised the Model Non-collusion Clauses
Introduction
On 17 January 2023, the Competition
Commission (the “Commission”) published
a revised set of Model Non-Collusion Clauses for procurers to incorporate in
their invitation to bid documents and contracts.
Background
In December 2017, with a view to reducing
the procurers’ exposure to anti-competitive conduct in the procurement process,
the Commission first published the Model Non-Collusion Clauses and encouraged
procurers to include the same in their bidding documents and contracts.
The Model Non-Collusion Clauses are mainly
composed of three parts:
1.
non-collusion wordings that procurers may include in an invitation to
bid and/or formal contract to:
a.
impose contractual obligation on bidders to prepare the bid
independently;
b.
provide express remedy for breach of the non-collusion
clause; and
c.
warn bidders of the consequences of
engaging in anti-competitive conduct;
2.
a model certificate for bidders to sign
and declare that the bid was developed independently; and
3.
a user guide on
such documents.
For more detailed coverage, please see our
articles covering the Commission’s first publication of the Model Non-Collusion
Clauses at the following links:
Reason
for the amendment
As the Commission gained more
investigative experience throughout the years, it discovered instances where a
number of businesses submitted bids that appear to be independent but in fact
have been coordinated due to the existence of a common beneficial owner.
Such behaviour misleads the procurers as
to the level of competition in a bidding process. The Commission therefore
considers appropriate to revise the Model Non-Collusion Clauses to address such
issue.
The
amendment
In the revised set of Model Non-Collusion
Clauses, bidders are required to identify their beneficial owners. When
procurers incorporate the model Non-collusion Clauses in their contracts, they
will be able to assess the potential competitiveness of the procurement process
more accurately with the information of the bidders’ beneficial owners.
Where bidders disclose a common owner to
another bidder, the Commission does not provide guidance on how the procurer
should respond. Instead, the procurer should refer to its own procurement policy
and consider the appropriate follow-up action.
Takeaway
The inclusion of the Model Non-Collusion
Clauses is voluntary. Nevertheless, it serves as a good point of reference for
procurers seeking to protect their interest against anti-competitive conduct.
The disclosure of beneficial ownership
will undoubtedly enhance the transparency of the procurement process. However,
procurers may have commercial concerns such as whether the extended disclosure
requirement will be too burdensome for bidders such that bidders may be
deterred from submitting a bid.
The Model Non-Collusion Clauses are meant
to be flexible and adjustable. Procurers may obtain legal advice to customize
their bidding documents and formal contracts in furtherance of their goals and
priorities.
For enquiries,
please feel free to contact us at: |
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Place, Central, Hong Kong |
Important: The law and procedure on
this subject are very specialised and
complicated. This article is just a very general outline for reference and
cannot be relied upon as legal advice in any individual case. If any advice
or assistance is needed, please contact our solicitors. |
Published by ONC Lawyers © 2023 |