CARTELS: Collusion in public procurement in health-care sector

20.11.2014
On September 29, 2014 the Antimonopoly Office of the Slovak Republic, Division of Cartels initiated the administrative proceedings against three undertakings in the matter of possible cartel agreement consisting in coordination of their procedure in public procurement related to construction of health-care facility financed by the European Union funds in the total amount of EUR 26,5 million.

Parties to the administrative proceedings include two undertakings acting in construction sector which submitted bids to the tender and the undertaking ensuring the services related to the public procurement for the contracting authority - University Hospital in Kosice. Information and documents serving as basis for administrative proceedings reveal that two undertakings might conclude an agreement on winner of the public procurement concerned and the undertaking ensuring the procurement-related services for the contracting authority assisted in the implementation of this agreement.

Such conduct might be contrary to the Article 4 of the Act on Protection of Competition No. 136/2001 Coll. in its valid wording and also the Article 101 of the Treaty on the Functioning of the European Union which provide for prohibition of agreements restricting competition.

Cartel agreements in public procurement (so called „bid rigging“) constitute one of the most harmful practices causing harm both to contracting authorities and to consumers since more public financials are spent which could have been used for other public projects. Since these agreements represent horizontal agreements between direct competitors, which are considered as hard-core cartels, cartel participant may be fined up to 10 % of their turnover for the preceding closed accounting period. A cartel participant has an option to fully avoid a fine if he was the first to provide, on its own initiative, decisive evidence to prove a violation of the prohibited agreement or was the first to provide, on its own initiative, information and evidence being decisive to perform an inspection. Detailed conditions of non-imposing or reducing a fine are summarized in the document “Leniency programme”.

In case it is proved that bidder participated in the collusion in public procurement, such bidder shall not take part in public procurements for three years since a final decision confirming existence of an agreement restricting competition is issued. The prohibition does not apply to those who have qualified for leniency under the leniency programme.

The fact that the Office initiated the administrative proceedings does not imply that the entities concerned have infringed the competition rules, nor does it prejudge the conclusions which the Office may reach in its decision.
Last update:04.12.2014