54% of buyers suspect collusion

21 May 2008
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22 May 2008

More than half of buyers have been suspicious of collusion among suppliers.

According to the latest SM poll of 100 buyers, 54 per cent said they had suspected suppliers of co-operating to fix the price of a contract. The remaining 46 per cent said they had never been suspicious of collusive activity among vendors.

The findings follow the recent investigation by the OFT into 112 construction firms suspected of fixing prices (News, 24 April).

The buyers surveyed noted different kinds of behaviour that raised suspicion. Andrew Grover, contracts manager at Southern Universities Purchasing Consortium, said: "In one case, suspicions were aroused when a supplier submitted an Excel file of tender prices that didn't just match those from another supplier, but also had the other supplier named in the header."

Mark Reed, purchasing manager at King's College Hospital NHS Foundation trust, said collusion is a "significant" problem in the pharmaceutical industry where some suppliers charge inflated prices.

Another purchaser, who wished to remain anonymous, said high bids and yearly inflation rates had been reflected in identical tenders from some of their suppliers. Those vendors are currently under investigation.

Some buyers said if suspicions were raised they would ask suppliers to break down the costs of their tender. And Penny Kemp, executive advisor at KPMG, suggested a whistle-blowing service where buyers could report suspicious behaviour confidentially and allow a case against the suppliers to be built.

But purchasers were also warned against jumping to conclusions. Nick Harries, director of sourcing and procurement at marketing and communications company Interpublic, said clever vendors know their market.

"Good suppliers will have intelligence about the pricing of their competitors and if they undercut them by a small margin, this can sometimes look suspicious, when in fact it's not."


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