How is competition between economic operators ensured?
The aim of the EU and the corresponding national public procurement rules is to ensure that the relevant public purchasing contracts are open to competition for suppliers across the internal market. This is ensured by means of tender procedures.
To safeguard genuine competition between tenderers, the law expressly states that contracting authorities must treat economic operators equally and non-discriminatorily and that they must act in a transparent manner and in compliance with the principle of free competition. The design of the procurement shall not be made with the intention of artificially narrowing competition by unduly favoring or disadvantaging certain economic operators. By applying these principles, public authorities can obtain products and services of the highest available quality at the best price under keener competition.
How is equality ensured?
The award procedures put in place must ensure the fair treatment of any economic operator who wishes to take part in a public tender. Tenderers must be in a position of equality both when they formulate their tenders and when those tenders are being assessed by the adjudicating authority (Case C-19/00, par. 34). The prohibition of discrimination means that a contracting authority cannot organize a tendering procedure in such a way that contractors from Member States other than that in which the contracts are awarded are discouraged from tendering (Case C-16/98, par. 108).
How is transparency ensured?
Transparency is intended to preclude any risk of favoritism or arbitrariness by contracting authorities. Transparency implies that all the conditions and detailed rules of the award procedure must be drawn up in a clear, precise and unequivocal manner in the contract notice or specifications so that, first, all reasonably informed tenderers exercising ordinary care can understand their exact significance and interpret them in the same way and, second, the contracting authority is able to ascertain whether the tenders submitted satisfy the criteria applying to the contract in question (Case C-171/15, par. 40). Transparency is ensured mostly through publicity requirements applicable to the award procedures.
When does a conflict of interests arise?
A conflict of interests arises in practice where a contracting authority may be guided by considerations unrelated to the tendered contract, resulting in preference being given to one tenderer over others. According to the law, a conflict of interests shall be deemed to exist where members of staff of the contracting authority (or of a procurement service provider acting on contracting authority's behalf) or members of contracting authority's administrative bodies or relatives thereof, who are involved in the procurement procedure or may influence its outcome, have, directly or indirectly, a financial economic interest or other personal interest which might be perceived to compromise their impartiality and independence in the context of the procurement procedure.
Conflicts of interests must be effectively prevented and, if identified, remedied in the conduct of public procurement procedures, in order to ensure that no distortion of competition takes place.
The Court of Justice of the European Union has ruled that, where a tenderer has had significant connections with experts appointed by the contracting authority to evaluate the tenders, it is for the contracting authority to examine all circumstances having led to the contract award decision, in order to prevent and detect conflicts of interest and remedy them. In this case, the unsuccessful tenderer may not be required to provide tangible proof of experts' bias (Case C-538/13, par. 47).
Can tenderers deviate from the tender conditions?
All tenders must comply with the tender conditions so as to ensure their objective comparison; otherwise, if tenderers were allowed to depart from the basic terms of the tender conditions by means of reservations, the requirement of equal treatment of bidders would not be complied with, except where these terms expressly allowed them to do so (Case C-243/89 par. 37 & 40).
Can contracting authorities accept amendments to the offers submitted by only one tenderer?
No. When a contracting authority takes into account an amendment to the initial tenders of only one tenderer, it is clear that this tenderer enjoys an advantage over his competitors, which breaches equal treatment and impairs the transparency of the procedure (Case C-87/94, par. 56). The principle of equal treatment requires tenderers to be afforded equality of opportunity when formulating their offers, which implies that the bids of all tenderers must be subject to same conditions (Case C-27/15, par. 36).]
Can same group companies participate and compete against each other in the same public tendering?
The Court of Justice of the European Union has ruled that it would run counter to the effective application of EU law to exclude systematically undertakings affiliated to one another from participating in the same procedure for the award of a public contract. In particular, the Court of Justice has found that EU law precludes a national provision which, while pursuing legitimate objectives of equality of treatment of tenderers and transparency in public contracts award procedures, lays down an absolute prohibition on simultaneous and competing participation in the same tendering procedure by undertakings linked by a relationship of control or affiliated to one another, without allowing them an opportunity to demonstrate that the relationship did not influence their conduct in the course of that tendering procedure (Case C-538/07, par. 33). The above being said, the same company cannot participate in the same procedure both individually and as member of a bidding consortium. This would impair healthy competition and equal treatment of tenderers (Decision 429/2008, Council of State's Suspensions' Committee).
If two companies of the same group participate separately in same public tender, are they allowed to exchange information?
No they are not. The Court of Justice of the European Union has ruled that companies participating in a public tender must compete against each other and make their tenders completely autonomously and independently even if they are part of the same group. While, therefore, it is not prohibited for related undertakings to separately participate in same contract award procedure, their tenders shall not be taken into consideration by the contracting authority and they shall be excluded from the procedure if it is ascertained that the links between them had a bearing on the content of their offers (Case C-513/16, par. 38).
In a case involving the submission by two Lloyd's syndicates of competing tenders in the same procedure for the award of a public service contract for insurance, the Court of Justice of the European Union held that the two syndicates should not be excluded solely on the fact that their tenders were each signed by the same person, namely the Special Agent of Lloyd's General Representative for Italy, without the syndicates having the possibility of proving that their tenders had been drawn up wholly independently from one another (Case C-144/17, par. 41). National law should however allow their exclusion if it appears, on the basis of unambiguous evidence, that their tenders were not drawn up independently.
When tenders must be opened?
To safeguard equality, contracting authorities must both set a final date for receipt of tenders, so that all tenderers have the same period after publication of the tender notice within which to prepare their tenders, and set the date, hour and place of opening tenders so that the terms of all tenders submitted are revealed at the same time (Case C-87/94, par. 55). Under Law 4412/2016, contracts are awarded in accordance with the criterion of the "most economically advantageous tender" which ensures compliance with the principles of transparency, non-discrimination and equal treatment and guarantees that tenders are assessed under conditions of effective competition. Contracting authorities must specify in the contract documents, the relative weighting which they give to each of the criteria chosen to determine the "most economically advantageous tender", unless this is identified on the basis of the price alone.
What information must a contracting authority give to candidates and tenderers relating to the award of a contract?
The contracting authority shall as soon as possible inform all candidates and tenderers on the decisions reached concerning the conclusion of a framework agreement, the award of a contract or admittance to a dynamic purchasing system (that is, an electronic process for making commonly used purchases, the characteristics of which, as generally available on the market, meet the requirements of the contracting authority, limited in duration and open, throughout its validity, to any economic operator satisfying the selection criteria and having submitted an indicative tender complying with the specification), including grounds for any decision not to conclude a framework agreement, not to award a contract, to recommence the procedure or not to implement a dynamic purchasing system.
Also, on written request from the candidate or tenderer concerned, contracting authorities must as soon as possible and in any case within 15 days upon receipt of the request, inform:
- Any unsuccessful candidate or tenderer of the reasons for the rejection of its request to participate or tender.
- Any tenderer who has made an admissible tender of the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer.
- Any tenderer that has made an admissible tender of the conduct and progress of negotiations and dialogue with tenderers.
Contracting authorities may decide to withhold part of the above information where this might prejudice, inter alia, fair competition between economic operators.
What conduct by tenderers is prohibited?
Tenderers must freely compete so that the best firm for the job may win. Therefore, bid rigging, market allocation and other price fixing practices in the context of public procurement procedures constitute illegal forms of collusion between tenderers and are prohibited (see 2014 relevant Practical Guide of Hellenic Competition Commission). These practices almost always result in economic harm both to the contracting authority, which has to pay a higher price for the contract, and to the public, who ultimately bear the costs as taxpayers or consumers.
What is bid rigging?
Bid rigging is a form of collusion between competitors, the most common forms of which include bid rotation (where bidders take turns being the designated successful bidder), cover
bidding (where some of the bidders agree to submit bids that are intended not to be successful so that another conspirator can win the contract) and bid suppression (where some of the competitors agree not to submit a bid so that another conspirator can win the contract).
Is bid rigging permitted?
No. Bid rigging amounts to a horizontal hard-core restriction of competition resulting in price fixing and market sharing between tenderers. It is heavily penalized under antitrust legislation (see Law 3959/2011). Penalties include the imposition by the Hellenic Competition Commission of administrative fines on the entities concerned (of up to 10% of their total turnover) and of a fine ranging from €200,000 to €2 million on their legal representatives and the persons involved in implementing the bid rigging arrangement. These persons may also be criminally sanctioned by a fine ranging from €100,000 to €1 million and with at least two years' imprisonment.
How has the Hellenic Competition Commission reacted to bid rigging?
The Hellenic Competition Commission issued in 2014 a Practical Guide aiming to assist contracting authorities to identify and prevent bid rigging practices.
In the much publicized case regarding collusion in tenders concerning large infrastructure projects, the Hellenic Competition Commission settled the case with 15 undertakings active in the Greek construction sector, finding that they had participated in at least one or several collusion schemes regarding tenders for public infrastructure works (Decision 642/2017). In the context of the settlement, the Hellenic Competition Commission imposed fines totaling €80.7 million. One of the participants received full immunity from fines under the leniency program. No fines were imposed on undertakings where authority's power to impose sanctions had been time-barred. The Hellenic Competition Commission has also issued its decision regarding those undertakings that opted not to settle, by virtue of which it has found that 23 undertakings were involved in bid rigging practices, four of which have been fined (Decision 647/2017). No fines were imposed where Hellenic Competition Commission's relevant power has become time-barred. In the context of both decisions, no infringement was established with respect to concession projects.
The Hellenic Competition Commission has also fined 9 construction companies for participating in a collusive scheme in the context of a public works tender in the Prefecture of Pella (Decision 644/2017). The authority took account of the adverse economic conditions and imposed a total fine of €805,591.00.
In addition, the Hellenic Competition Commission has settled a case involving bid rigging practices by five contractors regarding a public works tender in the Prefecture of Fthiotida (Decision 674/2018). The authority found that the companies involved coordinated their business conduct on their responses to the invitation to tender, including by mutually agreeing on the winning bidder and by engaging in cover bidding and bid suppression. This was the second case where settlement was opted for in the field of public works.
What other consequences may a finding of bid rigging have?
Involvement of a tenderer in bid rigging may constitute a ground of exclusion from future tenders.
Contracting authorities may exclude from participation in a tender an economic operator that, amongst other, is guilty of grave professional misconduct or has entered into agreements with other economic operators aimed at distorting competition, unless the economic operator produces sufficient evidence demonstrating its reliability despite the existence of such ground for exclusion, including proof of payment of compensation for any relevant damage, evidence of collaboration with the investigating authority and adoption of measures to prevent further misconduct. If the period of exclusion has not been set up by final judgment, that period shall not exceed three years from the date of the relevant event.
The Court of Justice of the European Union has clarified that, in case a tenderer has engaged in anticompetitive conduct penalized by a competition authority, the three-year exclusion period runs not from the end of the infringement or tenderer's participation in it but from the issuance of the antitrust authority's decision (Case C-124/17, par. 42). In same case, the Court of Justice also ruled that an economic operator may be required by national law to actively cooperate not only with the investigating antitrust authority but also with the contracting authority in order to re-establish its reliability despite the existence of a relevant ground for exclusion (par. 33).
Note: The author would like to thank Mr. Vangelis Kalogiannis for his valuable contribution to this chapter.
