António Lobo Vilela is a lawyer based in Macau and the author of the Macau Gaming Law Book
Surprisingly, a seventh bidder appeared in the public tender for the award of casino gaming concessions.
Several reasons made the public tender somewhat unattractive (and the new gaming concessions uninteresting) to new players in the Macanese market. Among these reasons are the fact that the number of concessions put out to tender is equal to the current number of casino operators; the short term of the concessions to be awarded coupled with the downsizing of the gaming industry in the last year; the tender requirements; and the absence of (great) short- and medium-term economic expectations; or the Macau government’s statements about not awarding future concessionaires new land.
The existence of a seventh bidder determines a new shuffling of the cards.
In addition to requiring an initial (new and complete) suitability assessment process for the bidder that had never operated in Macau and, therefore, being able to prolong a tender that the Macau government anticipated would be (too) swift, it makes the processual and procedural conduction of the public tender itself (even) more demanding.
The application for judicial review to the Court of Second Instance against the act of award by the unsuccessful bidder is no longer a remote possibility, which would not arise if the current casino operators were the only bidders. It may even become a serious possibility given that there can be no association of bidders (because it is not regulated) and, especially considering directors’ fiduciary duties of loyalty and care to the company and its stockholders, primarily as regulated by common law countries.
According to the law, the casino concessions are awarded to bidders deemed suitable and with financial capacity who present the most advantageous conditions for the Macau SAR in the proper operation of casino games of chance.
To specify the “most advantageous conditions,” the law establishes criteria for awarding the concessions that allow the comparison of the proposals submitted by the bidders during the evaluation and assessment carried out by the tender commission as the bidding jury.
In the recent amendment to the administrative regulation governing the public tender, the Macau government – rightly – changed the criteria for awarding the concessions, establishing (new) criteria (which it inappropriately calls “factors”) in line with the stage of development it anticipates and aspires for Macau’s primary industry. In fact, except for the criteria relating to premium, experience, and investment, all the other awarding criteria are new to the criteria used in the public tender opened in 2001.
All these awarding criteria (the list of which is merely illustrative) were transposed (as such) to the tender program (which also mentions that they are illustrative, although criteria not expressly provided for may not be considered…).
Thus, the tender program establishes that “in selecting the bidders and evaluating the proposals, the following factors shall be considered, among others:
1) The amount of the variable portion of the proposed premium;
2) The plans aimed at expanding the markets of clients from foreign countries;
3) Experience in operating casino games of chance or related areas;
4) The interest to the Macau SAR from investments in gaming and non-gaming related projects;
5) The casino management plan;
6) The proposed supervision and prevention of illicit activities in casinos;
7) The social responsibilities they intend to assume.”
However, the tender program is silent as to the relative weight that each of these criteria has in ascertaining the “most advantageous conditions” presented by the bidders, i.e., the weighting factors necessary for assessing the awarding proposals and the selection and ranking of the bidders.
This fact led to (at least) two requests for clarification to the tender commission by the bidders, who responded through two of the 114 clarifications it provided (in 2001, only 14 clarifications were provided…).
Clarifications nos. 74 and 86, both dated 26 August 2022, state (in the Portuguese language version) that “[s]ubject to respect for the principles of justice and impartiality, the weighting coefficient and the calculation mechanism, as factors to be considered when evaluating the bids, will be defined in due course so that the respective information will not be provided to the bidders” (the Chinese language version does not contain the phrase “so that,” inculcating that the “respective information” will not be provided at all).
According to the tender program, the public tender “comprises a minimum of two phases: the first phase is for the submission of awarding proposals, followed by one or more consecutive consultation phases with the bidders, aimed at evaluating the awarding proposals submitted (…)”.
The tender commission has already started the first round of the consecutive consultation phases, having met with all bidders in the last week of September. It has already opened the enclosures containing the awarding proposals submitted, taking note of them. It has already sat with the bidders at the table to negotiate the proposals. However, the Macau government did not consider it appropriate to define the “weighting coefficient and the calculation mechanism” before that time.
It is not enough to be; one must appear to be, just like Caesar’s wife.
The lack of prior definition of the “weighting coefficient and the calculation mechanism” makes it possible to arbitrarily reorder the criteria, valuing or devaluing the relative importance of each one of them, thus allowing the jury to select the proposals or choose the bidders as it sees fit. It is like playing a game where the rules are set after the cards are face up.
This can cast a shadow over the public tender to award casino gaming concessions in Macau and force a new shuffling of the cards.
Best of British!