The Commission for protection of competition sanctioned Technomat-Mercury Ltd., TPKI Zdravohod and Kavaler Union 2001 Ltd. for bid rigging in public tenders
By Decision № 1254/21.11.2024, adopted under Article 15 LPC and Article 101 TFEU, the Commission for protection of competition (CPC) imposed pecuniary sanctions of 2 745 996 BGN in total for collusive tendering between three undertakings, which participated in public procurement procedures for the supply of professional footwear to government officials. The infringement was aimed at distorting and preventing competition on the respective market and lasted from 02.05.2018 up until 22.12.2022.
The cartel practice consisted in the exchange of information on the bids that were about to be submitted by the participating undertakings with the aim of allocating the tender to a predetermined party. This resulted in the submission of similar bids to the public tender, where one of the undertakings would offer 100% of the estimated value of the tender, while the other would offer 99% of that value. The infringement was conducted with the support of an attorney, who represented all of the infringing parties and prepared the submission of their documents to the public tenders through the Electronic Public Procurement System.
The restrictive practice constitutes a cartel, which falls under the scope of both national and EU competition law because of its appreciable effect on trade between Member States. Throughout its investigation, the Commission worked in close cooperation with the European Commission on the basis of Regulation (EC) 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82, and by that ensured the uniform application of the Union’s competition rules.
During the proceedings TPKI Zdravohod has been transformed by the separation of a new cooperative – TPKI Comfort, which acquired all the assets of the transforming cooperative.
In accordance with the case law of the Court of Justice of the European Union, to prevent undertakings escaping liability for fines for infringements of Articles 101 and 102 of the TFEU through legal or organisational changes, the CPC exercised its right to find the economic successor of the undertaking liable and to impose a fine on it, for the infringement of Article 101 of the TFEU.
The pecuniary sanctions which were imposed constituted 12% of the respective turnover of each member of the cartel, and were further increased by 15%, because of the breach of Article 101 TFEU.
The investigation was initiated after the Commission received a signal from the Ministry of Defense which was further followed by another one that concerned the same parties from the Ministry of Internal Affairs. This is yet another case where contracting authorities have signaled the CPC for suspected bid rigging in their tender procedures, following the adoption in 2020 of the Guidelines on fighting bid rigging in public procurement, which proved to be a valuable source of information on this kind of restrictive practices.
With the adoption of the Guidelines and by conducting regular trainings for public contracting authorities in tender procedures, the Commission is actively trying to fulfill one of its main priorities in recent years-to prevent bid rigging in public procurement. The success of the CPC actions on this matter is attested by the increased cooperation with public buyers, who manage to suspect potential infringements and indicate them to the competition authority. As a result, the Commission is able to conduct more investigations into possible violations in tenders and protect the public interest.
Bid rigging in public tenders distorts effective competition, by raising the prices of public purchases, lowering their quality, impeding innovation and/or limiting output. The results of such practices in public procurement are the waste of public resources, and the effective prevention of the public from receiving products and services at a better price and quality. For this reason, the proactive stance of the Commission on this matter in recent years is necessary in order to ensure that the public interest is not harmed. Yet another step in that direction is the Seminar for contracting authorities organized by the OECD and the Commission on the 21st and 22nd November 2024.
The full text of the Decision is now available in the public electronic register of the Commission and can be accessed by using the following link:https://reg.cpc.bg/