A Competition Agenda towards Integrity in Public Procurement

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"Over the last two years, the Mexican Competition Authority has resolved three cases of collusion in public procurement. These cases (and other efforts) have endowed the authority with a better understanding of how competition in public procurement can be hindered and/or how competition law is more likely to be breached. Three relevant lessons derived from these cases are: 1) outsourcing can be used as a collusion mechanism; 2) competition can be simulated when bidders belonging to a same economic interest group are allowed to present more than one bid; 3) collusion can occur even at the market-research stage, especially when methods other than a public tender are used. The lack of competition in public procurement can be caused by at least three reasons: 1. A bad regulatory design; for example, the law allows for the use of methods other than public tenders justified ambiguously or subjectively. 2. A bad design of the procurement procedure; for example, the restriction of participation through unnecessary requirements or granting advantages to certain agents with certain technical specifications or other criteria. 3. The lack of institutional incentives for the correct enforcement of regulations; for example, not to carry out thorough market research analysis.

With this in mind, COFECE published the document submitted, which includes 13 recommendations (6 directed to the executive branch and 7 to the legislative branch, both of the federal level) aimed at reducing room for the discretional application of the procurement laws and corruption, and that foster competition through a better design of the procedures and through the reduction of opportunities for collusion and simulated competition."