Bid Rigging Legal Framework in Zambia Natalie Nakazwe Research Analyst

PRESENTATION OUTLINE Introduction Definition of Bid Rigging Provisions on CCP Act on Bid Rigging Relevant Penalties for Legal Contraventions CCP Act in Relation to Tender Fraud Provisions in Jurisdiction MOU with Procurement Agencies

I NTRODUCTION Zambia’s Competition Commission has been in existence since 1997 following the enactment of the Competition and Fair Trading Act (CFTA) in 1994 The CFTA was repealed and replaced with the Competition and Consumer Protection Act No. 24 of 2010 (CCPA). The CCPA unlike the CFTA is more comprehensive and gives the Commission more enforcement powers. The Commission investigate and assess both Competition and Consumer related cases

D EFINITION Bid rigging as defined under Section 2 of the CCP Act is a “ horizontal agreement between enterprises where- (a)one or more parties to the agreement agrees not to submit a bid in response to a call for bids; or (b) the parties to the agreement agree upon the price, terms or conditions of a bid to be submitted in response to a call for bids.”

B ID RIGGING P ROVISIONS IN THE CCP A CT The Competition and Consumer Protection Commission (CCPC) captures provisions dealing with bid rigging in Part III of the CCP Act specifically sections 8 and 9. Section 8 states that: Any category of agreement, decision or concerted practice which has as its object or effect, the prevention, restriction or distortion of competition to an appreciable extent in Zambia is anti-competitive and prohibited. Section 9 states that; A horizontal agreement between enterprises is prohibited per se, and void, if the agreement- C) “involves bid rigging, unless the person requesting the bid is informed of the terms of the agreement prior to the making of the bid.”

R ELEVANT P ENALTIES FOR L EGAL C ONTRAVENTIONS Section 9 (2) states that; “ a person who contravenes subsection (1) commits an offence and is liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or to imprisonment for a period not exceeding five years, or to both. (3) an enterprise that contravenes subsection (1) is liable to pay the Commission a fine not exceeding ten percent of its annual turnover.”

INTERFACE BETWEEN BID RIGGING PROVISIONS IN CCP A CT AND T ENDER F RAUD P ROVISIONS IN Z AMBIA ’ S J URISDICTION The Public Procurement Act of 2008 is a comprehensive Act that gives the ZPPA the powers to regulate public and private procurement in Zambia. Part VII of the Act has provisions that relate to tender fraud, specifically section 65 to 68 and sections 74,75,77 to 80 has provisions and remedies dealing with conduct of procuring entities and bidders or suppliers. Remedies for the provisions include suspension for minor misdemeanours, permanent barring, hefty fines and maximum of 5 years imprisonment.

C ONT ’ D … Illegal conduct stipulated in the PP Act is; 66-false information and conniving with bidders 67-corrupt or coercive practices, price fixing, criminal conviction related to business 68-inducement by bidder/supplier etc Just like the PP Act, the CCP Act place stiff penalties (Heavy financial penalties or 5 years imprisonment or both) on parties that contravenes the Act

MOU’ S WITH P ROCUREMENT A GENCIES Section 43 of the CCP Act allows the Commission to enter into MoUs with sector regulators with the view of enhancing the enforcement of competition law The Commission does not have any current MOU’s with the ZPPA. ZPPA has been the governments purchasing body historically. The role of ZPPA has changed in the recent past with them transitioning into an authority or a regulator and tendering now lies with the individual ministries of government. CCPC has pursued a formal agreement with ZPPA but it has been challenging to establish a working relationship with the authority. Recent bid rigging case created a delicate relationship that needs to be nurtured. ZIPS and CCPC have a working MOU and a joint working committee.

MOU WITH ZIPS Signed on 10 th November 2011 Joint processing of complaints Establishment of JWC Sharing of Resources Exchange of Information Confidentiality Investigations

E XAMPLES OF C ASES OF BID RIGGING INVESTIGATED UNDER CCPA Fertiliser cartel case Evidence of Bid rigging noted in the bidding of tender for supply of fertiliser under FISP Government lost over USD 20 million due to price fixing and bid rigging related conducts by bidders

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