Uruguay: Auction design promoting price-fixing, say experts

The way in which Uruguay’s auctions for public contracts have are designed could be a major element in inciting price-fixing and bid-rigging agreements among companies, warned businessmen, law experts and economists.

Speaking during a series of seminaries organized by the Commission for the Promotion and Defense of Competition, Ricardo Poggi of the Chamber of Hardware, General Store and Affiliates stated that in many recent auctions the government has failed to set a timeframe for payment or a set of parameters to allow for revisions caused by, for example, a changing exchange rate and inflation.

“We know this affects competition. How can we budget accurately, when we don’t know when we might see a paycheck? It forces us to, somehow, pool together (…) It’s very hard to be a supplier to the state. We expect the government to once again pay too much for its purchases, and for certain sectors to benefit from it.”

On the other hand, economist Leandr Zipitria warned that agreements between companies have become increasingly hard to detect due to the nature of Uruguay’s market. The expert singled out leniency laws as a key to tackling this problem, saying “‘we have to reinforce our leniency policies, highlighting those cases where leniency has been granted and showing the results it has had on markets, how it has allowed us to lower prices.”

Source: En las Gradas

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