The European Commission has released new guidance for European contracting authorities on how to use EU law to address suspected cases of collusion in public procurement (the “Notice”). The Notice, published on March 13, 2021, provides Member States with a set of tools to fight collusion in public procurement and guidance on how to apply the related grounds for exclusion.
To create a level playing field for businesses across Europe, EU law sets out minimum harmonized public procurement rules designed to govern the way public authorities and certain public utility operators purchase goods, work, and services. They are transposed into national legislation and apply to tenders whose monetary value exceeds a certain amount. For tenders of lower value, national rules apply. Nevertheless, these national rules also have to respect the general principles of EU law.
By means of the Notice, the European Commission aims to raise awareness among contracting authorities and businesses alike when it comes to respecting the rules and ensuring genuine competition in public procurement markets.
EU public procurement rules and implementation
EU directives on public procurement cover tenders that are expected to be worth more than a given amount. The core principles of these directives are transparency, equal treatment, open competition, and sound procedural management. They are designed to foster a procurement market that is competitive, open, and well-regulated.
Collusion, the practice of economic operators entering into illegal agreement to distort competition in award procedures, essentially undermines the benefits of a fair, transparent, competition-driven, and investment-oriented procurement market. Collusion (also referred to as “bid rigging”) is a recurring phenomenon in public procurement markets (including in key economic sectors, such as construction, IT, and health) and cases of collusion are regularly identified throughout the European Union, although fairness and transparency performance may vary among Member States.
Under EU law, collusion between economic operators is prohibited by Article 101 of the Treaty on the Functioning of the European Union (TFEU), which explicitly addresses agreements and concerted practices that aim to prevent, restrict, or distort competition within the internal market and that may affect trade between Member States.
Tenderers who collude can be excluded from tender procedures on the basis of mandatory or optional grounds pursuant to the 2014 Public Procurement Directives. If sufficiently plausible indications of collusion are found, contracting authorities may be required by Member States to exclude an economic operator from a tender procedure. However, detecting and addressing cases of collusion in public procurement presents particular challenges for national authorities.
In an attempt to solve this issue, the Notice details the tools that the European Commission intends to put in place to help Member States and contracting authorities build the capacity to address the issue of collusion before the award procedure is concluded (Section 3). Measures that Member States and contracting authorities may follow are incorporated in the ongoing professionalization initiatives for public procurement staff, promoted by the commission in line with its 2017 Recommendation on professionalization.
In addition, the Notice also provides tools to promote cooperation between national central public procurement and competition authorities to ensure effective and continuous support for contracting authorities (Section 4). To support national authorities in their efforts, the European Commission states that it will consider ways to enable information sharing across the EU on economic operators that have been excluded from award procedures on grounds of collusion, in compliance with EU and national data protection law.
The Notice also contains guidelines for contracting authorities on how to apply the grounds for exclusion due to collusion provided in the Public Procurement Directives (Section 5). This section provides practical indications for identifying bid rigging by flagging suspicious practices related to:
- The texts of tenders (for instance, the same typos or phrases in different tenders or comments left by mistake in the text of a tender indicating collusion among tenderers);
- The prices offered in the award procedure (for instance, tenderers that offer excessively high or low prices, although the overlap of this with the rules on abnormally low tenders is not explored);
- Administrative details (for instance, multiple tenders submitted by the same business representative).
Section 5 also includes a discussion of the rights of tenderers to perform what is known as “self-cleaning.” In fact, Article 57(6) of Directive 2014/24/EU gives economic operators that are in a situation justifying their exclusion the right to prove their reliability despite the existence of grounds for exclusion.
Lastly, the Notice includes an annex that provides pointers for contracting authorities on how to (i) design award procedures in a way that deters collusion between tenderers; (ii) detect potential collusion when evaluating tenders; and (iii) react to such suspected collusion.
Preventing and combating collusion in Italian public procurement
Collusion in public procurement has been high on the agenda of competition authorities in recent years. Indeed, in the effort to address the problem of collusion, national competition authorities in most Member States have issued specific guidance on fighting collusion.
In Italy, collusion is addressed in Guidelines no. 6 issued by the National Anti-Corruption Authority (ANAC, Resolution 11/10/2017, No. 1008, as amended). According to the guidelines, collusion provides grounds for exclusion from tender procedures upon occurrence of the serious professional misconduct cited in letter c) of paragraph 5 of Art. 80, Legislative Decree 50/2016. Indeed, according to the ANAC such behaviors assume relevance for the purposes of assessing the integrity and professional morality of the participant, and if those are revealed to be lacking that can determine exclusion from the procedure for awarding the contract.
To this end, the Notice provides Italian and other national contracting authorities with new practical tools and indications for screening available information to detect suspicious tenders more effectively.
We also note that in September 2013 the Italian Competition Authority (ICA) issued a “Vademecum,” or set of guidelines, specifically addressed to contracting authorities that deals with antitrust concerns in public procurement and which still serves as a useful tool in assessing ambiguous behaviors and potential collusion among tenderers.