THE FIGHT AGAINST CARTELS: ANTITRUST WILL STRENGTHEN ITS ACTION IN THE FIELD OF PUBLIC PROCUREMENT. HANDBOOK PREPARED TO ASSIST CONTRACTING AUTHORITIES TO IDENTIFY ANTI-COMPETITIVE ANOMALIES IN TENDERS

Collaboration with customers is necessary in order to defeat a phenomenon which hurts directly the whole community and leads to an increase in costs for the provision of works and supplies

To step up the fight against the possibility of cartels between companies that participate in tenders for public procurement with the collaboration of the contracting authorities – this is the aim of the Antitrust Authority which has prepared a handbook to be sent to those who issue a tender so that they may take on the role of a “guard” and report to the Authority anomalies that are typical of actions that could potentially distort competition. Since it was established the Antitrust Authority has launched several preliminary proceedings in this area that were concluded with the imposition of sanctions in excess of €500 million. These are circumstances that need to be fought with determination because they lead to an increase in costs for the provision of works or supplies and therefore hurt directly the whole community.

The handbook seeks to help contracting authorities to notice signs of a distortion in competition and to identify anomalies in behaviour that are a symptom of competitive distortions, whose actual existence can, however, only be ascertained by the outcome of the preliminary proceedings that the Authority should decide to launch as a result of reports that are received.

The Antitrust Authority suggests that at first the context should be considered.  Cartels in fact happen with greater frequency when the markets that are involved have certain characteristics: a small number of competitors or competitors who are characterized by similar levels of efficiency and size; involve the same products; there is a continued participation in tender competitions of the same companies; the tender is divided into several lots having a similar economic value.

Within this general framework there are signs of unusual behaviour:

a)        Boycott of the tender competition

The main indications of a boycott, meant to extend the contract with the usual supplier or to share pro rata the provision of works or of supplies

among all interested firms, are: 1) no submission of offers; 2) the presentation of a single offer or of a number of bids that would, however, still be inadequate to proceed with the award of the contract; 3) the presentation of bids with the same amount, especially when tendering procedures envisage in these circumstances the cancellation of the tender or the award of the contract on a pro rata basis.

b)        Offers of convenience

Offers of convenience give the appearance of a regular competition to the tender and mask the rise in the adjudication prices. The main indications are: 1) offers that are submitted by firms that do not win the tender and that are characterized by amounts that are manifestly too high or in any case higher than what these same companies had offered under similar procedures; 2) offers that contain special conditions and that are widely known to be unacceptable to the contracting authority and which bring about their exclusion; 3) the submission of bids that are priced higher in relation to the price list. In general a series of tenders in which the same firm is always successful could give rise to the suspicion that the bidders have presented offers of convenience.

c)        Subcontracts or Temporary Association of Companies (Associazione Temporanea d’Imprese, ATI)

Subcontracts and Temporary Associations of Companies permit the widening of the number of persons who may participate in tender competitions, allowing space even to smaller businesses. In some cases, however, they can be used by bidders in tender competitions to carve up the market or even for a single contract. Possible indications are: 1) businesses that are able on their own to participate in a tender completion but which instead refrain from doing so in view of a subsequent subcontract or that opt to set up a Temporary Association of Companies; 2) the setting up of Temporary Associations of Companies or subcontracting undertaken by companies that are linked by the same main activity; 3)  the withdrawal of a bid by a company that decides at first to take part in a tender competition which then results to have benefited by the award of a subcontract under the same tender competition; 4) in the case of an award based on the most economically advantageous bid, a Temporary Association of Companies (among the major operators) may be the result of a strategy based on exclusivity, aimed to prevent small enterprises from achieving the necessary score reflecting quality.

d)        Rotation of tender bids and sharing of the market

Even an analysis of the sequence of the award of tenders may indicate the presence of a cartel. When the practice to share is of interest only to one single client, the latter will have clues to be aware of suspicions regarding the observation of the rules from the sequence of successful bidders or from the division into lots of the awarded tenders. Suspicions regarding these regular awards may concern not only the number of awards but also the sum of the amounts involved.

e)        “Suspicious” procedures to participate in a tender bid

It may happen that the members of a cartel will submit requests to participate in tender bids by means of procedures that may go against the standard approach. This is the case of 1) common typing errors; 2) same spelling; 3) reference to questions by other participants in the same tender competition; 4) similar estimates or calculation errors; 5) delivery at the same time by the same person of several tender bids on behalf of different participants in the same bidding process.