All types of violations

Creating the Illusion of Competition

In the qualification stage for selecting potential suppliers, the buyer (contracting authority) excludes “extra” companies. Only two or more controlled companies are allowed to submit price proposals. This scenario involves collusion between several companies and the buyer to create the illusion of competition. These companies may be affiliates or colluding. One characteristic sign is the low cost-saving at the end of the procurement process; the winning price proposal is usually close to the initial procurement price.

To identify such high-risk procurements, it’s essential to gather data on purchases where:

  • The difference between the planned price and the winning bid is less than 1% (the range for analysis can be adjusted).
  • Shell competitors are used to mimic competition. These types of companies submit a large number of bids, initially intended to lose to the partner company. A criterion to identify a shell competitor is proposed (more than 15 bids and over 95% losses). If the analyzed company often participates in procurements with a shell competitor, there may be signs of simulated competition.
  • Unlike the top losers, rotating wins imply that each colluding participant wants to win, but a strategy has been set where they give up wins in some procurements to secure wins in others. Given that each is concerned about their benefit, the market share, on average, doesn’t change over an extended period when applying this strategy. It is necessary to calculate data on the market share within specific markets and identify those where changes don’t occur.
Responsible institutions

Agency for the Protection and Development of Competition of the Republic of Kazakhstan

010000, Astana city, Mangilik El avenue 8, 'Government House,' entrance 1

Internal Government Audit Committee of the Ministry of Finance of the Republic of Kazakhstan (IGAC)

Oversight of Compliance with the Republic of Kazakhstan’s Procurement Legislation, including Desk Audits

010000, Nur-Sultan city, Zhenis Avenue, 11.

Regional Internal Audit Departments of the Republic of Kazakhstan (RIADs) 

Territorial Divisions of the Internal Government Audit Committee of the Ministry of Finance of the Republic of Kazakhstan

Conducting Scheduled On-Site Audits

010000, Nur-Sultan city, Zhenis Ave, 11.

Office of the Attorney General

010000, Nur-Sultan, Mangilik El Avenue, 14.

Dispute Templates

General Risk Template

Purchasing examples

Supplier Collusion

"It has been established that LLC 'ABK-Autodor NS' and LLC 'Kazahdorstroi' participated in public procurements, one of which created fake competition for the other, to make the procurements occur at the highest possible price," the statement reads.

Knowledge base

Cost of building a school place in Kazakhstan for 2021-2022