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:

1.       The Competition Commission formulated the Model Non-collusion Clauses and Non-Collusive Tendering Certificate to help procurers reduce their risk of being exposed to bid-rigging

2.       Issues concerning the Competition Commission’s Model Non-collusion Clauses and Non-Collusive Tendering Certificate

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:

E: competition@onc.hk                                                      T: (852) 2810 1212 W: www.onc.hk                                                                    F: (852) 2804 6311 19th Floor, Three Exchange Square, 8 Connaught 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