On 31 January 2017, the Belgian Competition Authority published a guide for contracting authorities on collusion between undertakings in public procurement (the “Guide”).
Since its creation in 2013, the Belgian Competition Authority has made public procurement a priority of its competition law policy.
However, to date it has never adopted a decision condemning an illegal agreement between candidates in the course of a public procurement procedure, whereas such decisions are common in France.
Named “bid rigging”, collusion between companies in public procurement aims in particular to allocate the markets by coordinating the offers submitted and/or by fixing the prices of each candidate. For reminder, the mere exchange of information between potential candidates, for example as to whether or not to participate in a public procurement, may constitute an infringement of competition law.
The Guide aims to inform contracting authorities on the definition of “cartel” and the concept of “bid rigging” by providing some examples of common forms of this illegal practice such as cover offers, cancellation of offers, rotation of offers and split of the markets.
The Guide also provides contracting authorities with a list of warning signs that may indicate an illegal agreement in the procurement context. These signals may relate to the offer, documents submitted, price, company declarations or behaviour of the candidates.
The Competition Authority has identified the characteristics of certain markets, which may facilitate such practices, in particular where they concern identical or simple products or services, where there are few or no substitutes and these products are not prone to technological innovation.
According to the Authority, repetitive public procurement or the ones subject to a constant and foreseeable demand present a higher risk of infringements of competition law. This is particularly true for markets likely to interest a small number of undertakings due to a lack of interest from potential entrants or from bidders who know each other well.
The Guide also provides guidance to reduce the risk of concerted submissions. The advice provided includes the necessity to ensure the best possible market preparation, the widest possible market opening, the inclusion of anti-cartel clauses in market documents, the disclosure of limited information, particularly on potential candidates, on what is considered an appropriate price or on the budget in general. Furthermore, the Authority recommends that contracting authorities avoid information sessions with the candidates, retain documents of the procedure and train staff on this type of risk.
Finally, the Competition Authority invites contracting authorities to contact it in case of suspicion of an illegal agreement.
However, it is not clear that, in the event of complaints, the Authority will be able to ensure the full effectiveness of the rules set forth in the Guide. Indeed, the Authority has limited human resources and must focus its efforts on concentrations between undertakings following notifications of mergers.
Given the risk for both candidates and contracting authorities, it is recommended that all parties become adequately informed and take necessary protective measures. As regards the contracting authority, it may be a question of suspending the organization of the public procurement procedure, or even of cancelling it.
Concerning the candidate, he may have to terminate any contact with one or more potential candidate(s) or, in the context of joint offers, it is advised to frame legally those contacts by adopting guidelines and concluding confidentiality agreements.
Annabelle Lepièce, Partner, annabelle.lepiece@cms-db.com
