This presentation by Tina Soreide was made at the first session of the 2014 Global Forum on Competition (27-28 February) which focused on fighting corruption and promoting competition. Find out more at http://www.oecd.org/competition/globalforum

1. Corruption and Competition
OECD, PARIS 28-29.02.2014: GLOBAL FORUM ON COMPETITION
Tina Søreide
Economist, The Faculty of Law, University of Bergen, Norway

2. The competition corruption dynamics
Corruption – the solution when competition control gets tough?
Corruption – contracts – profits
Corruption – market power - contracts – profits
Corruption – lower costs – contracts- markets – profits
Corruption – politics – priorities – criteria - contracts- profits
Corruption vs other government failures; what’s the difference? –
- The character of ‘trade in decisions’
- The more competition is reduced, the more profitable for those involved
Competition control; rarely designed to address corruption
… but, countries with weak competition control are more exposed

3. Defining corruption
LEGAL
LEGAL GREYZONES
ILLEGAL
Honest and professional business conduct
Ordinary marketing
Marketing targeted at specific individuals: exclusive excursions, sports tickets, gourmet evenings, etc.
Unsolicited proposals, with all details of an unplanned project prepared
Middlemen and agents, ‘personal relationship is what counts’
Gifts to political parties – by condition of a certain benefit
Quid pro quos – a way of covering corruption?
‘Facilitation payments’ – ‘to get the procedures going’
Bargaining on opportunities for reconcessioning (profitable solutions for the firm)
Violations of rules of communication (as if they were not important)
Persuade politicans at home to put pressure on local gvms. (difficult to prosecute)
Acquire secret information about evaluation, use of ‘fronts’
Misuse of ‘facilitation payments’ (makes corruption ‘less illegal’)
Expensive gifts to people involved in the tender procedure
Buy secret information about competitors’ bids
Local partnership with relatives of people with authority
Bribes to individuals with influence on the procedure

4. Advantages obtainable
- along the whole sector value chain
PLANNING
FINANCING
PROCUREMENT
DELIVERY
RESULT

5. Implications
Corruption & competition - far more than bid rigging
• Violation of competition law
• Cost reductions, tax exemptions, biased interpretation of law
• Politics & national champions
Consequences observed in markets
Not fought by competition control alone
…but anticorruption not enough either
Outcome control vs procedure control (ex utilities)
Governance vs sector dysfunctions (ex construction)

6. Legal framework
- more than penal code and procurement rules
- significant variation across OECD countries ; law and enforcement
UNDUE INFLUENCE/
CORRUPTION
SECTOR GOVERNANCE,
REGULATION AND
CONTROL
UNDUE INFLUENCE
AT/FROM THE POLITICAL
LEVEL
LEGAL APPROACHES
PREVENTION
DISCLOSURE
Competition law, procurement
rules, criminalization of
corruption, employer liability,
Audits, leniency, whistleblower protection,
confidentiality-rules, access to
information laws
Public lobby register, impartiality
requirements, independent
sector regulation and control
Media, watchdogs,
whistleblowers, auditors/NAO

7. Liability and sanctions + debarment in public
procurement (problem solved in compliance + selfcleaning?)
Blame on individuals
Protecting markets and
innocent employees,
avoiding free-riders
Heavy fine on
corporations
Hit profits & bonuses +
owners, avoid scapegoats

8. Some other serious policy concerns
• The OECD convention is too asymmetrically enforced. Free & fair
markets - a public good; bribery abroad is not ok for securing national
commercial interests
• Financial secrecy facilitates the corruption that hampers
competition; too condoned by some OECD governments
• Transparency International’s National Integrity Studies across
Europe: The barriers against political corruption are too weak
• Dealing with corruption as an obstacle to competition is a
political matter; it has to start at the top