Collectivists See Collectivism

Collectivists See Collectivism

Collectivists. See Collectivism.

Collusive Tendering, collaboration by firms to submit tenders on agreed terms. The agreement may be that each will quote the same price (level tendering), that one will offer a lower price than the rest (allocating contracts), that some will quote prices above the rest (cover prices), that proposed tenders will be submitted to a central office which will 'adjust' unreasonably' low ones, or that each will raise his tender by an amount sufficient to cover the costs of preparing tenders in all the firms and the firm securing the contract will reimburse the others for these costs.

Level tendering is an extension of price agreements into industries where sales are made by submitting tenders. The constructors of heavy electrical equipment, for example, have at times agreed to tender at fixed prices and to limit competition to their comparative technical efficiency in fulfilling contracts. When firms share markets in agreed proportions as well as fix prices, they must nominate the one to submit the lowest tender for each contract. This system obtained for some years before the Second World War in the sale of metal windows. These examples show that collusive tendering needs to be judged in the light of the circumstances. It may be argued that the selling power obtained by manufacturers of electrical machinery by level tendering simply offsets the buying power of their few large customers. The short-lived system of allocating contracts in the metal window industry did not reduce competition from wooden windows.

The practice of letting rivals know the cover price and of submitting 'dummy' tenders at these prices is said to exist in the British building industry. Building contractors argue that in order to main-tain their places on architects' lists they are forced to submit tenders even when too busy to do the work; a cover price enables them to submit a realistic tender with safety. Collaboration on cover prices could, of course, extend to tacit agreements on actual prices. Builders' conferences in various parts of Britain have had arrangements to register proposed tenders and 'adjust' those thought 'unreasonably' low. It has been argued that this practice protects, for example, public developers constrained to accept the lowest bid, from in-efficient contractors quoting unprofitable prices out of anxiety to secure a contract and then trying to recoup theft position by skimping the job. Reimbursement of tendering costs has also been arranged by building conferences. Tendering costs are invariably a sore point with contractors. When a tender is not accepted they appear as so much wasted expenditure. They are, however, simply a cost of securing business, and there is no substantial difference between firms individually recovering these costs as part of their overheads and their doing so collectively in a reimbursement scheme. The London Builders' Conference has been investigated by the Monopolies Commission, which found that its tendering arrangements had little effect in restricting competition.

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