NSW and ACCC partner to detect cartel behaviour using AI

The NSW Government has announced that it is joining forces with the Australian Competition and Consumer Commission (ACCC) to form a partnership to stamp out illegal ‘bid rigging’ cartel behaviour. The partnership will utilise AI to process tender response data and identifying opportunities for referral to the ACCC to take legal action.

The announcement is a direct outcome of discussions at the Commonwealth Treasurer’s Economic Reform Roundtable last month.

The NSW Government will seek to share tender data and information with the ACCC to identify suspicious patterns that may indicate collusion between companies bidding for tenders. AI systems will be employed to process the huge amounts of contract documents, submissions, tender data and other relevant information that the NSW Government receives as part of its procurement. The ACCC will then screen that data to seek out patterns and identify possible cartel behaviour.

A global study by the Organisation for Economic Co-operation and Development (OECD) estimates that improving competition and stopping collusion could save the government as much as 20% on its contracts.

When companies operate in cartels, they work together to raise prices or lower the quality of the goods or services offered in public tenders. This activity is illegal but can be hard to identify. Suppliers who are found to be engaging in cartel conduct could be prosecuted by the ACCC and suspended from being considered for contracts with the NSW Government.

The NSW Government spends more than $42 billion each year on goods, services and construction. Being able to identify where large companies are colluding to raise prices or reduce the quality of products will help the government deliver better projects.

Combating bid rigging through data sharing and screening tools has already had an impact in other OECD countries. In South Korea, cartel screening flags on average 80 cases per month. Between 2018 and 2021, 26 investigations led to fines totalling approximately AU$15 million.

“We’re partnering with the ACCC so we can deploy world-leading technology to deter would-be conspirators,” said Treasurer Daniel Mookhey. “There are many good operators in NSW — and those are the companies we want to do business with.

“This agreement is designed to neutralise bid rigging and other cartel conduct in order to get the best outcomes for NSW taxpayers.”

“The ACCC looks forward to new data sharing arrangements with the NSW Government which will help identify suspicious patterns in procurement indicating collusion and cartel conduct between tenderers,” said ACCC Chair Gina Cass-Gottlieb. “We are committed to working with all levels of government to prevent government procurement processes from being the target and victim of cartel conduct.

“Cartel arrangements, such as bid rigging, often inflate costs for consumers or other businesses and are a serious breach of the law.”

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