IT supplier group TechUK has said it is concerned that a report from the Office of Fair Trading (OFT) on government IT procurement focused too much on allegations of collusion between suppliers.
TechUK welcomed the overall report, but was concerned about allegations of price-fixing which it said lacked any evidence.
“There is no evidence of either tacit co-ordination or collusion by suppliers,” said TechUK.
The OFT report said tacit co-ordination arises where suppliers recognise they can reach a more profitable outcome by co-ordinating their actions to dampen competitive rivalry. This happened through “implicit understanding of each others’ future actions, rather than through arrangements”, said the report.
“Our analysis suggests that some of the characteristics that increase the possibility of tacit co-ordination are present in some public sector ICT markets, while others are not,” said the OFT report.
Julian David, CEO at TechUK said: “If the OFT has been investigating eight months and found no evidence, why write about it in the report?
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“We are puzzled as to why – along with 11 recommendations backed up by evidence and with appropriate suggestions for improvements, which are urgent and need to be addressed – they have also commented on unsubstantiated allegations of tacit co-ordination or collusion with a recommendation that, because no evidence of this behaviour has been identified by the OFT, another body should have a go at finding some.
“The OFT is referring to something that was in a report in 2011.”
Accusation and repudiation
The report was the 2011 Public Administration Select Committee report entitled: Government and IT – ‘a recipe for rip-offs’: Time for a New Approach, which made allegations of anti-competitive behaviour and collusion.
The OFT report said buyers did not provide any evidence in response to a question about anti-competitive behaviour. It acknowledged that “suppliers, both large and small, strongly refuted [sic] the allegation, asserting that the sector is fiercely competitive”.
The OFT report continued: “For example, in some software sectors, we see high, stable and symmetrical shares of supply, consistent with the ability to reach and sustain co-ordination.
"In outsourced IT, on the other hand, there are large numbers of firms and apparently lower levels of concentration that could make co-ordination more difficult.”
David said the OFT should focus on the 11 recommendations it made that are backed up with evidence. “These unsubstantiated comments must not become an excuse for failure to address the recommended actions in this report.
"The findings, where evidence is clear, provides public sector buy–side and technology suppliers the way to improve the market.
David said TechUK was willing and able to help public sector procurement departments to improve their methods, by offering private sector skills and experience as well as buyer camps to train staff.