Procurers urged to update tender terms as Hong Kong SAR toughens anti-collusion regime

Mohammed Talib, a Hong Kong-based construction disputes expert at Pinsent Masons, was commenting on the publication of enhanced non-collusion clauses (NCC) and supporting documentation by the Hong Kong Competition Commission. The updated clauses (20 pages/286 KB PDF) are designed for procurers to incorporate into tender documents and contracts.

“The Commission's enhanced clauses reflect increasing scrutiny around anti-competitive behaviour, especially in the construction sector,” said Talib. “They also underline the growing importance of robust tender conditions and procurement mechanisms that can identify, prevent and address collusive conduct."

The Commission said the changes are intended to provide stronger safeguards against cartel conduct by increasing the legal and financial consequences for businesses found to have engaged in collusion.

Bid-rigging, market sharing and price-fixing are classified as serious anti-competitive conduct under Hong Kong's Competition Ordinance. According to the Commission, such practices can distort procurement exercises, reduce competition and result in procurers paying inflated prices for goods and services.

The model NCC was first introduced in 2017 and includes both anti-collusion wording for tender documents and a "non-collusive tendering certificate" that bidders must sign. The framework is designed to warn bidders against entering anti-competitive arrangements and provide procurers with contractual remedies where breaches occur.

Under the enhanced version, bidders that sign the certificate and are later found to have engaged in collusive conduct may face not only damages claims and penalties under competition law but could also be exposed to prosecution for the common law offence of conspiracy to defraud. Convictions can carry a sentence of up to 14 years' imprisonment.

The revised clauses also require bidders to submit a statutory declaration confirming that their bid has been prepared independently and without collusion. Making a false statutory declaration could itself constitute a criminal offence, carrying a maximum penalty of two years' imprisonment and a fine.

Talib said: "Procurers should review and update their tender documentation to ensure it reflects the new requirements, while contractors need to recognise the importance of compliance given the potentially onerous obligations and consequences that now accompany these declarations."