Client Updates

The Egyptian Competition Authority Discovers Bid-Rigging Cartel in the Automotive Sector

In a recent investigation the Egyptian Competition Authority (ECA) uncovered collusion in a public bidding process carried out by the Cairo Transport Authority (CTA).

In a recent investigation the Egyptian Competition Authority (ECA) uncovered collusion in a public bidding process carried out by the Cairo Transport Authority (CTA). According to the ECA’s finding two companies providing automotive spare parts collude to coordinate their bids in a CTA tender for certain parts for buses and coaches. Consequently, the two companies were disqualified from the tender and removed from the list of approved suppliers of the CTA.

The ECA initiated their investigation due to irregularities in the bidding process for the supply of brake pads, air compressors, and roller bearings for buses and coaches tendered by the CPA. The investigation revealed that two companies that partook in the tender colluded to coordinate their actions throughout the bid process. The ECA found that this bidding cartel violated the Egyptian Competition Law (specifically, article 6(c) of the Egyptian Competition Law, Law 3/2005), negatively impacted fair competition and (potentially) caused damage to public funds.

Upon conclusion of the investigation by the ECA, the CTA annulled the tender and announced that they will conduct a new bid process to award the contract for supply of spare parts for buses and coaches. Furthermore, the CTA sought to impose further sanctions to deter companies from engaging in similar practices in the future. To design appropriate penalties the CTA consulted the fatwa Department at the State Council of the Ministry for Local Development. The department recommended blacklisting the two companies found to have formed the bidding cartel. It remains unclear whether the ECA will seek further sanctions—such as fines—in addition to the administrative sanctions. Considering the increase attention, the ECA pays to bid rigging, it is likely that they will seek fines.

In accordance with its strategy 2021-2025 the ECA has established a specialized department tasked with combatting collusion in bidding processes. The role of this department is to examine all bids and tenders organized by public entities. It is also charged with raising awareness among public sector employees of anti-competitive practices and their negative effects. As part of these affords the ECA is producing guidelines on how public authorities may deal with harmful practices in close collaboration with the General Authority for Government Services. Furthermore, the ECA will issue antitrust compliance guidelines for the private sector.

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