Detection of abusively low prices in Tunisian public procurement using control charts

Walid Gani

International Journal of Procurement Management, 2017, vol. 10, issue 5, 568-580

Abstract: In Tunisian competition law, abusively low price (ALP) is considered as an anti-competitive practice and it is frequently applied by bidders in public procurement. For the detection of ALPs, the Tunisian Competition Council (TCC) is still working with a classical approach which does not rely on a scientific decision rule and may lead to wrong decisions. To overcome this issue, this paper proposes a new approach for detecting ALPs in public procurement using control charts, which works as follows. In a first step, a control chart for reference prices of goods and services is constructed. In a second step, the proposed bidders' tenders are compared with the results of the constructed control chart. Bidders' prices located below the lower control limit are considered as ALPs, while those situated above the upper control limit are considered as cover biddings. To show the effectiveness of our proposed approach, we applied it to two real cases of Tunisian public procurement. Results demonstrated that our proposed approach performs better than the TCC's approach not only in detecting ALPs, but also in revealing cover biddings.

Keywords: abusively low price; ALP; anti-competitive practices; antitrust; bid rigging; control charts; cover bidding; public procurement; statistical decision rule; Tunisia. (search for similar items in EconPapers)
Date: 2017
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