Cover pricing is illegal
Cover pricing is a practice that competition regulators are
actively investigating here and overseas. The ACCC issued a news
release on 21 September 2009 in which it stated that "cover
pricing involves one company colluding with another during the
tender process to obtain a price that is intended to be too high to
win the contract for the project on price alone. The company then
submits this price as a genuine tender".
Cover prices are obtained when a company does not want to win a
particular contract for various reasons, but still wants to be seen
as tendering for the project.
Collusion of this sort is illegal under the Trade Practices Act
1974 (Cth). It misleads the client about the real extent of
competition, artificially distorts the tender process, and reduces
the odds that other companies will be invited to tender.
