Dilemma 5:  Cartels - Answer

In many countries, if competitors agree to collaborate or discuss pricing during a bid (other than in a permitted joint venture or consortium which is declared to the client), they would be breaching competition law.  Competition law normally carries severe civil and /or criminal penalties, such as fines and imprisonment for individuals, and fines and debarment for organisations.  This type of unlawful collaboration is referred to as a “cartel”. 

In countries where there is no specific cartel offence, involvement in a secret cartel is likely to constitute fraud on the client, as bidders are representing to the client that they are bidding in competition whereas they have secretly pre-agreed the winner. 

Therefore, do not under any circumstances get involved in a cartel.  Nor must you get involved in discussing a possible cartel.  You should therefore immediately say to the competitor’s manager words to the effect of “definitely not”, and immediately walk away from the discussion. 

Once you return to your office, you should record exactly what happened in writing, and report the incident to Buildwell’s compliance function (if it has one) or to a company director.  If you are a director, you should report to the Chief Executive.  If you are Chief Executive, you should report to the Board.

Buildwell’s top management should then consider whether the circumstances of the suggestion were sufficiently serious to warrant a report to the authorities.  Note that, even though you immediately walked away from this conversation, the circumstances suggest that at least one competitor may be trying to form a cartel, and may be successful with other organisations.