A comprehensive preliminary inquiry has been conducted by the Competition Board on the undertakings operating in the laboratory equipment and services area. As a result of the examinations conducted under the preliminary inquiry, it was established that, particularly for procurements of goods and services through direct procurement in the healthcare sector, the practice of cover bidding aimed at ensuring the selection of a certain undertaking has become a part of the procurement procedure.
As is known, article 4 of the Act no 4054 on the Protection of Competition prohibits collusive practices between undertakings. Cover bidding practice in public procurements essentially includes collusion between undertakings. Significant savings would occur in case a race existed and demand were to be satisfied through a practice that would allow the procurement of higher quality goods and services at lower prices. However, in the cover bidding practice, certain goods and services may be procured from the same person or undertaking at high prices due to collusive behavior.
Another point established by the examinations conducted under the preliminary inquiry is that cover bidding is frequently demanded by the procuring administrations or managers or procurement officials. In those cases where more than one bid is required by the procurement procedure, instead of requesting separate bids from undertakings, relevant departments or officials of public institutions may request the undertaking from which it shall purchase to bring sufficient number of bids or to ensure other undertakings to make suitable bids.
Such direct procurement practices are important not only because they have a negative effect on the functioning of the market, but also because of their potential to cause significant damages to the public. For a swift resolution of the problem, an investigation was not initiated after the preliminary inquiry concerning the relevant undertakings; however, it was decided that an opinion should be rendered to
- the undertakings under examination on how they should terminate the violation, in accordance with paragraph 3, article 9 of the Act no 4054,
- the head organizations of the relevant public institutions stating that procurement personnel should not request cover bids, and
- the relevant associations of undertakings.
Within the framework of the establishment that cover bidding practices are widespread in other sectors as well, it has become clear that all undertakings and associations of undertakings should be informed. Within this framework, it must be known that cover bidding on any grounds for the sake of formality is prohibited and wrong. Managers and procurement officials of public institutions/organizations should neither request cover bids from undertakings nor should they direct these undertakings towards making cover bids. It is also clear that the request of cover bids by administrations or officials would not legitimize the cover bidding practices of undertakings.
Lastly, it must be emphasized that the subject is important both for ensuring efficiency and preventing corruption in public procurements and for the competitive operation of markets, and that relevant employees and managers of all public institutions carry significant responsibility on the subject. A reminder on the subject was deemed necessary to prevent relevant persons and undertakings from facing various sanctions under the Act no 4054.
Respectfully submitted for the information of the public.