By Dr Anna Blume Huttenlauch, LL.M. (NYU) and Dr. Roland M. Stein, LL.M. Eur.*
Anti-competitive agreements affecting public procurement can leave big holes in government coffers to the ultimate detriment of the taxpayer. In addition, public procurement authorities may find that companies engaging in anti-competitive behaviour are “unreliable” and should therefore be excluded from the tender process.
In light of these risks, this article provides an overview of the OECD’s Recommendation on Fighting Bid Rigging in Public Procurement (July 2012) (the OECD Recommendation), which so far has received relatively little attention in the theory and practice of public procurement law in Germany.
The OECD Recommendations largely build on the OECD’s Guidelines for Fighting Bid Rigging in Public Procurement (February 2009) (the OECD Guidelines), which were published in 26 languages and caught the eye of a number of different countries and organisations.
As early as October 2013, the Italian competition authority published a handbook on fighting bid rigging that was based on the OECD Guidelines. The German Federal Cartel Office (the Bundeskartellamt) followed suit in December 2014 and provided public procurement authorities with a concise checklist on bid rigging which makes reference to the more detailed OECD Guidelines for further information.
This article begins with an overview of common forms of bid rigging (see I.) and market characteristics that facilitate collusion (see II.), as set out in the OECD Guidelines. The discussion then turns to the OECD Recommendation (see III.) and concludes with a brief analysis of the checklists included in the OECD Guidelines, i.e. the Checklist for Designing the Procurement Process To Reduce Risks of Bid Rigging (the Design Checklist) (see. IV.) and the Checklist for Detecting Bid Rigging in Public Procurement (the Detection Checklist) (see. V.).
I) Common forms of bid rigging
Bid rigging can take many forms, yet the result is usually the same: purchasers fail to obtain goods and services at the lowest possible price. Companies involved in bid rigging typically engage in one or more of the following four strategies:
- The most common form of bid rigging is cover bidding (also known as submitting supporting bids), which aims to give the appearance of genuine competition. Participants agree in advance which company should be awarded a particular contract, and then submit higher bids than the designated winner. Participants may also submit bids containing terms and conditions, which they know will be unacceptable to the procurement authorities.
In the “Gas Insulated Switchgear” case, the Commission assumed “supporting bids”. The cartel members had agreed that the designated winner of a certain tender could request „supporting tenders“ from other companies in order to make sure that the contract would be awarded it as provided by the cartel arrangements The sole purpose of these “supporting tenders” was to create the false impression of genuine competition.
- A second form of bid rigging is bid suppression, where participants agree not to compete for certain contracts or to withdraw their bids.
- Bid rigging can also take the form of bid rotation, where participants submit bids for a number of different contracts but agree in advance to rotate the designated winner (with the aim to ultimately allocate the same monetary value of orders to each participant). Participants may also agree to allocate contracts according to their revenue or market share figures. Such a form of bid rigging was assumed by the Commission in the Elevators and Escalators case, in which the cartel members had coordinated their bids for maintenance contracts for elevators and escalators, which were newly installed or already in service.
- Finally, participants may agree to carve up the market by refusing to submit bids or by submitting cover bids for contracts covering certain geographical markets or customer segments. Customers or customer groups are therefore allocated to particular companies.
Gas Insulated Switchgear is a case where a market carve up was detected by the Commission. In this case, Japanese and European companies reached detailed agreements on the global allocation of contracts, according to which European cartel members should win tenders in their respective ‘home markets’ but should not bid for tenders in Japan whereas Japanese cartel members should stay out of Europe. A similar market carve up was also assumed in the Power Transformers case.
Companies involved in bid rigging may choose to combine any of these four strategies (e.g. by rotating cover bids). The systematic combination of different strategies may result in certain patterns indicative of bid rigging. Awareness of these patterns will assist public procurement authorities in uncovering anti-competitive agreements more easily (as discussed in more detail in IV). For example, a geographic market carve-up often appears in combination with bid rotation. Cartel members typically agree that tenders in their respective “home markets” should be awarded to the home producers. All other tenders are often allocated in due consideration of historical market shares, utilized capacities (“factory loading”) and individual preferences.
A combination of different bid rigging strategies was detected by the Bundeskartellamt in the so called fire trucks cartels. The market partitioning was conducted on the basis of lists specifying the municipalities issuing the tender, the vehicle type needed as well as the location and deadline of the tender. A suitable discount and pricing policy ensured that tenders were awarded to the designated winner.
II) Market characteristics facilitating collusion
The OECD advises public procurement authorities to be particularly sensitive to potential bid rigging in markets that exhibit one of the following characteristics:
- Markets with a small number of suppliers tend to be more vulnerable to bid rigging. The lower the number of suppliers, the easier it is to coordinate bidding behaviour. This is particularly true in markets for highly specialised technology or engineering services. Markets where the number of players is limited due to patents or intellectual property rights may also be affected.
- Bid rigging is also more likely to occur where market entry is particularly expensive, difficult or time-consuming, thereby protecting incumbents from competitive pressures and potential new entrants. One example is the construction industry where companies have to purchase very expensive equipment to provide certain services.
- Stable market conditions may also increase the risk of bid rigging, as companies can more easily predict the frequency and volume of future procurement work if demand from the public sector is relatively stable. In contrast, companies will find it more difficult to set up bid rigging schemes (or maintain existing arrangements) if there are significant variations in demand or supply.
- The frequency of tendering also has an impact on the risk profile of a given market. Companies will find it a lot easier to allocate contracts among one another if the tender processes within the industry are relatively frequent and similar in nature. In addition, companies involved in bid rigging can discipline each other more easily: if a company breaches an anti-competitive agreement, the other participants can thwart that company’s prospects for winning future contracts.
- Companies can also more easily agree a common price or maintain anti-competitive agreements over a long period of time if the products in question are identical, very similar, relatively easy to produce, and undergo only limited technical innovation.
- Finally, companies intending to engage in bid rigging can raise prices with little difficulty if the products or services in question only have a limited number of substitutes, if at all.
Experience has shown that the abovementioned market and product characteristics enable companies to enter into and maintain anti-competitive agreements. At times, the fault lies with the design of the tender process itself. This is a problem which can be solved by public procurement authorities themselves. However, the situation is more complicated where bid rigging is the product of more general market characteristics over which public procurement authorities have little influence. Nevertheless, public procurement authorities are well advised to constantly monitor certain market characteristics, particularly the number of potential bidders and the competitive pressures within a market. In addition, public procurement authorities should aim to work closely with other procurement as well as competition authorities.
The increasing control of markets and the investigation of suspicious cases imply substantial investments in terms of time and administrative efforts for public procurement authorities. This can be particularly burdensome where a service needs to be procured urgently. However, in light of the potential (criminal) liability and reputational risks, these efforts are typically well justified.
III) The OECD’s Recommendation on Fighting Bid Rigging in Public Procurement
Following the OECD Guidelines, the OECD published in 2012 its Recommendation on Fighting Bid Rigging in Public Procurement. Here, the OECD offers two main recommendations, namely: (i) public procurement authorities should aim to improve the intensity and effectiveness of competition in the tender process (see 1.); and (ii) member states should seek to improve already existing instruments for uncovering bid rigging (see 2.).
- Intensification of competition in the tender process
With its first recommendation, the OECD calls on its member states to review the various features of their public procurement laws and practices, and assess to what extent existing laws and practices facilitate collusion between bidders. National and local governments should design tender processes that promote effective competition, reduce the risk of bid rigging and ensure overall value for money. To implement this recommendation, the OECD suggests that member states adopt the following seven measures:
a) Public procurement officials should have a comprehensive understanding of the market
First, public procurement officials should in each case have a comprehensive understanding of the general market characteristics, the range of relevant products and/or services and the providers of the same. This information should be collected before officials begin to design the tender process. To build up this expertise as quickly as possible, the OECD recommends in its Design Checklist that public procurement authorities educate themselves on the characteristics of the relevant market as well as recent industry activities or trends that may affect competition for the tender. In particular, authorities should monitor the development of prices in neighbouring geographic areas or for alternative products, and analyse information about past tenders for the same or similar products. Moreover, public procurement authorities should enter into a dialogue with other procurers. Finally, it is important to assess whether the market in question exhibits any of the characteristics discussed in II. above, as these can facilitate bid ridding.
b) The number of potential bidders should be maximised
Secondly, public procurement authorities should promote competition by maximising the number of potential bidders. This can be achieved by ensuring that the terms and conditions for participating in the tender process are transparent, non-discriminatory, and do not unreasonably limit competition. The Design Checklist therefore suggests that public procurement authorities should take care not to impose threshold requirements that may limit the number of potential bidders (especially as regards the size, composition, or nature of potential bidders). Instead, authorities should ensure that any threshold requirements for submitting bids are proportional to the requirements of the particular contract.
In addition, participation in the tender process can be increased if the costs of bidding are reduced (e.g. by streamlining or packaging tenders). In order to attract the highest number of bidders, public procurement authorities should also make sure that the tender specifications and terms of reference do not describe how the bidder is to fulfil a particular contract; instead, they should focus on what is to be achieved exactly. Finally, the tender process should encourage participation from foreign or smaller companies (e.g. by allowing smaller firms to bid only for certain parts of a particular contract).
c) Communication between bidders should be limited
Thirdly, the OECD recommends that the tender process is designed to limit (where possible) communication between bidders, either before or during the tender process. In particular, public procurement authorities should use sealed-bid tender processes. Authorities should also avoid bringing together bidders at meetings or on-site visits during the tender process (if such meetings or visits are necessary, authorities should engage with bidders individually to keep confidential the identity of their competitors). This point is reiterated in the Design Checklist.
In addition, public procurement authorities should not ask for bids to be submitted in person, as this provides an opportunity for last-minute communications between companies. Authorities should further avoid disclosing competitively sensitive information about the bidders when publishing the results of the tender, as this can facilitate bid-rigging for future tenders. Similarly, the number of bidders should not be disclosed at any point.
In German law, the secrecy of competition principle [Geheimwettbewerb] ensures that minimum contact between bidders is a central element of the tender process. This principle is derived from the competition principle [Wettbewerbsgrundsatz] contained in Art. 97 para. 1 Act against restricts of competition (ARC). Case law has confirmed that compliance with the secrecy of competition principle is essential and indispensable for ensuring that a tender process is competitive. Bidders engaging in anti-competitive conduct may, therefore, be excluded from the tender process according to Art. 124 para. 1 No. 4 ARC (revised edition), except for cases of fraud, where exclusion is mandatory pursuant to Art. 123 para. 1 No. 4 ARC (revised edition).
The secrecy of competition principle is also enshrined in German secondary legislation. As a result, public procurement authorities are required by law to conduct tender processes in secret. In the context of construction contracts, authorities also have to keep secret the identity of bidders who have inspected the tender documentation. In addition, authorities have to keep confidential any bids until the opening date. The same applies for professional services contracts.
d) The selection criteria should be designed to improve competition
Fourthly, public procurement authorities should adopt selection criteria designed to improve the intensity and effectiveness of competition in the tender process, and to ensure that there is always a sufficient number of credible bidders with a continuing interest in bidding on future contracts. Authorities should adopt selection criteria, which ensure that credible bidders, including small and medium-sized companies, are not deterred unnecessarily from participating in the tender process.
According to the Design Checklist, procurement authorities should not over-emphasise the importance of performance records. Where possible, authorities should consider other relevant experience. Authorities should also keep confidential the terms and conditions of each bid (unless applicable laws provide otherwise). The OECD further recommends that whenever public procurement authorities evaluate bidders on criteria other than price (e.g., product quality, post-sale services, etc.), such criteria need to be set out clearly in advance and given adequate weight.
These recommendations are consistent with German law where the transparency principle [Transparenzgrundsatz] governs the adoption of selection criteria. Accordingly, public procurement authorities must publish any such criteria in advance of the tender. Authorities have full discretion to define the content and scope of the selection criteria; however, they will be bound by these criteria throughout the tender process.
e) Electronic bidding systems
Fifthly, the OECD suggests that public procurement authorities use electronic bidding systems, which may be accessible to a broader group of bidders and less expensive. Electronic systems also facilitate the storage and analysis of bidding behaviour and data.
The use of electronic bidding systems has already been recognised at the European level in the form of Directive 2014/24 on public procurement. Art. 61 of the Directive provides for the introduction of the online repository of certificates e-Certis to facilitate cross-border tendering in particular. Member States are therefore asked to ensure that certificates and other forms of documentary evidence relevant to the tender process are constantly kept up-to-date.
In German law, Art. 97 para. 5 ARC (revised edition) sets out the principle of electronic communication in public procurement. Accordingly, procurers and bidders should use electronic means for the transmission and storage of data during the tender process.
f) Bidders should sign the Certificate of Independent Bid Determination
Sixthly, the OECD recommends that bidders sign a “Certificate of Independent Bid Determination”. A “Certificate of Independent Bid Determination” requires bidders to disclose all material facts about their communications with other bidders regarding the tender. Bidders also need to confirm that their bids are genuine, non-collusive, and made with the intention to be legally binding. Public procurement authorities should also consider whether bidders should be required to provide a sworn affidavit and signature of an authorised representative with their bid. Authorities may also impose additional penalties for statements that were made fraudulently or inaccurately.
The Certificate of Independent Bid Determination is similar to the self-declaration of suitability in German law. Public procurement authorities may ask bidders to provide such a self-declaration as evidence of their expertise, ability and integrity. Bidders can demonstrate the sincerity of their intention to perform the contract by submitting an appropriately worded declaration. Bidders also need to prove their reliability by showing that they have not committed any relevant criminal offences, and that no other grounds for exclusion exist. For this purpose, public procurement authorities may ask bidders to produce extracts from relevant registers or, in certain cases, a sworn affidavit.
In addition, European legislators have introduced the European Single Procurement Document (ESPD) in Art. 59 of Directive 2014/24/EU, which provides for a standardised self-declaration form at EU level when the Directive takes effect on 18 April 2016.
g) Warning regarding the sanctions for bid rigging
Seventhly, public procurement authorities should include in the invitation to tender a warning regarding the sanctions for bid rigging that exist in a particular jurisdiction (e.g. fines, prison terms and other penalties under competition or criminal laws, suspension from participating in public tenders for a certain period of time, sanctions for signing an untruthful Certificate of Independent Bid Determination and potential liability for damages to the relevant public procurement authority).
2) Improving already existing instruments for uncovering bid rigging
The OECD’s second recommendation aims to encourage member states to improve already existing instruments for uncovering bid rigging. In particular, member states should encourage national competition authorities to work more closely with public procurement authorities. The authorities should produce joint materials on bid rigging and suspicious behaviour or patterns, which should then be distributed to public officials involved in the tender process. Secondly, national competition authorities and public procurement authorities should provide joint training sessions for public procurement officials. Finally, member states should encourage a continuing relationship between competition authorities and procurement authorities, with the aim that procurement authorities will report any suspected collusion to competition authorities. Member states should also consider how to properly incentivise public procurement officials to prevent and detect bid rigging.
IV) Design Checklist – further recommendations
In the Design Checklist, the OECD recommends that public procurement authorities adopt three further measures to promote more effective competition in public procurement and reduce the risk of bid rigging. Authorities should: (i) define their requirements clearly and avoid predictability (see 1.); (ii) ensure that the tender requirements are independently reviewed (see 2.); and (iii) raise awareness among staff about the risks of bid rigging (see 3.)
Clearly defining any requirements and avoiding predictability
The procurement process is particularly vulnerable to bias and corruption during the drafting of the terms of reference and specifications. The OECD therefore recommends that any such terms should be drafted in a way that is clear and comprehensive. Public procurement authorities should not describe how the bidder is to fulfil a particular contract; instead, they should focus on what is to be achieved exactly. The clearer the requirements, the easier it will be for potential suppliers to understand them and submit bids. In addition, the requirements should always leave room for substitute products or innovative sources of supply.
The tender process needs to be clear, transparent, and predictable. However, procurement schedules and quantities should be varied (where possible). Predictable procurement schedules and stable quantities can facilitate collusion, but higher value contracts and less frequent procurement opportunities reduce the risk of anti-competitive agreements, which in turn promotes competition. Public procurement authorities should also consider aggregating or disaggregating their contracts to avoid predictability in the size and timing of tenders. Alternatively, authorities may work together with other procurers and run joint tender processes to vary the value and timing of tenders.
In German law, construction contracts require a description of the scope of work and schedule of works - the former has to fulfil the strict requirements contained in Arts. 7 and 7a VOB/A (revised edition). The scope of work has to be set out clearly and comprehensively to ensure that all bidders have the same understanding. It also has to be possible to calculate prices without difficulty. Art. 7 b para. 2-4VOB/A (revised edition) sets out the format of the schedule of works. Where necessary, the scope of work has to be graphically represented. In addition, the work has to be divided into equivalent individual pieces of work with appropriate pricing information. The same applies for professional services contracts.
Given that a comprehensive definition of the scope of work is key to a proper tender process, the OECD further recommends that procurement authorities only go to tender when the specifications have been fully formulated. German law therefore stipulates that procurement contracts need to be award-ready [Gebot der Vergabereife]. Accordingly, public procurement authorities should only tender a contract if they know that they will be able to award the contract. While this principle is not expressly set out in German law, it can be clearly derived from a number of regulations. Case law further provides that public procurement authorities are required to take all necessary steps under private and public law so that successful bidders can begin performing the contract within the stipulated time frame.
Independent review of the schedule of works
The schedule of works should be independently reviewed to ensure that they are defined as clearly as possible. Any such review should take into account the problems which arise if a public procurement authority instructs a private company to carry out preparatory work in connection with a tender, and said company subsequently wants to participate in the tender process. This prompts the question whether the experience the company has acquired in carrying out any preparatory work provides it with such an advantage over other bidders that competition is distorted.
The ECJ decided in Fabricom that companies involved in the preparation of a tender must not be categorically excluded from the tender process. Instead, the company in question needs to be given the opportunity to prove that, in the circumstances of the case, the experience which it has acquired is not capable of distorting competition. Accordingly, Art. 7 VgV provides that a public procurement authority has to ensure that competition is not distorted if a company that has carried out preparatory work in connection with a tender subsequently participates in the tender process. This can usually be achieved by providing all bidders with the same information that had been provided to the company involved in any preparatory works. It is possible, however, to exclude such a company from the tender (according to Art. 124 para. 1 No. 6 ARC (revised edition)), but only as ultima ratio in case that company’s competitive advantage cannot be remedied in any other way.
Raising awareness among staff about the risks of bid rigging
It is important that public procurement officials receive continuous training that improves their ability to detect competition issues during the tender process. Given that the existence of anti-competitive agreements is often only uncovered when data is analysed over a longer time period, it also makes sense to collect historical data, constantly monitor bidding activities, and analyse bid data.
The OECD further suggests that public procurement authorities work together with national competition authorities or (external) lawyers to provide employees with regular training on bid rigging and cartel detection, and to store information on past tenders. In addition, the OECD suggests that public procurement authorities periodically review past tenders for suspicious patterns, especially in industries that are particularly susceptible to collusion. Authorities should also implement certain mechanisms, such as whistle-blower systems, to collect information on bid rigging from companies and their employees, as well as a complaints mechanism where companies can register their competition concerns. Finally, procurement authorities should encourage or require officials to report any suspicious behaviour to the relevant competition authorities.
V) Detection Checklist – further recommendations
The second checklist included in the OECD Recommendations provides public procurement authorities with a number of suspicious factors and patterns indicative of bid rigging.
Warning signs and patterns when companies are submitting bids
Bid-rigging schemes can be very difficult to detect as they are typically negotiated in secret. However, unusual bidding or pricing patterns may provide clues for bid-rigging. Public procurement authorities should take note of any suspicious patterns as regards the way in which companies submit bids and the frequency with which they win (or lose) particular contracts. Companies that have subcontracted certain services or are part of an undisclosed joint venture may also raise suspicions. Authorities should also pay close attention if a company is often the lowest bidder, only wins contracts in certain geographical areas or always bids on contracts but never wins. Moreover, authorities should investigate any case where a regular supplier fails to bid on a contract they would normally be expected to bid for, or where some suppliers unexpectedly withdraw from the tender process. Authorities should exercise particular care where companies seem to take turns in submitting winning bids, or where several companies submit a joint bid even though at least one of them could have bid on its own.
Warning signs in documents submitted by bidders
It is important to review the documents submitted by bidders for any signs of bid rigging. Public procurement authorities should carefully review all documents for evidence that suggests that bids were prepared by the same person or were prepared jointly. There is a number of signs indicative of bid rigging: bid documents or letters submitted by different companies may contain identical mistakes, such as spelling errors or miscalculations, or a large number of last-minute adjustments. It is particularly suspicious if bid documents from one company expressly refers to a competitor´s bid or uses another bidder’s letterhead or fax number. As regards content, public procurement authorities should examine whether bids from different companies quote the same cost estimates for a large number of items, or whether bid documents submitted by different companies contain less detail than would be necessary or expected, or appear non-genuine. Authorities should exercise particular care if competitors submit identical bids or increase prices at the same rate.
Warning signs and patterns related to pricing
Analysing bid prices may also help to uncover collusion. It is particularly suspicious if price increases do not reflect cost increases, or if there are large differences between the price of a winning bid and other bids. According to the OECD, cover bids usually offer a price that is (more than) 10% higher than the winning bid. Public procurement authorities should also take note whenever companies unexpectedly withdraw discounts or rebates during the tender process. Further investigation is also necessary where a company quotes a much higher price for a particular contract than it did for another, similar contract, or if prices are suddenly reduced following the bid of a new bidder. Local and non-local companies quoting similar transportation costs may also be indicative of bid rigging.
Occasionally, public procurement authorities may find that companies make suspicious statements, which can suggest the existence of an anti-competitive agreement. For example, bidders may justify their prices by reference to “industry suggested prices”, “standard market prices” or “industry price schedules”. In addition, companies may state that they do not sell in a particular area or to particular customers, or that an area or customer “belongs to” another supplier. Similarly, company statements may reveal non-public knowledge of a competitor’s pricing or bid details. Finally, companies may use the same terminology when explaining price increases.
Public procurement authorities should also be sensitive to any suspicious behaviour by companies, such as “private meetings” before submitting bids or regular meetings between suppliers. Authorities should also take note if a company requests a bid package for itself and a competitor, submits both its own and a competitor’s bid and bidding documents, or makes similar enquiries to those made by other competitors. Authorities may also find that a company brings multiple bids to a bid opening and chooses which bid to submit after (trying to) determine who else is bidding.
Advice to caution when warning signs are present
The Detection Checklist lists a number of instances which can be indicated of bid rigging. However, the OECD clearly states that these warning signs and patterns do not amount to conclusive proof that companies are engaging in bid rigging. For example, a company may not have bid on a particular contract because it did not have capacity. Similarly, high bids may simply reflect a different estimate of the costs of a particular project. Thus, public procurement authorities should carefully collect any information that may help them to detect particular patterns over time, which, in turn, will enable authorities to determine whether a company is acting lawfully or is involved in bid rigging, given the facts of a particular case.
Next steps if the authorities suspect bid rigging
Public procurement authorities should take a number of steps if they suspect that companies are engaging in bid rigging during the tender process. First and foremost, authorities should obtain a working understanding of the law on bid rigging in their particular jurisdiction. Secondly, all tender documents should be preserved, including bid documents, correspondence, envelopes, etc. Authorities should also keep a detailed record of all suspicious behaviour and statements including what was said and by whom, at what point in time, and in whose presence. Finally, public procurement authorities should contact the relevant competition authority and consult with the in-house legal team on whether to proceed with the tender.
The OECD Recommendations provide important guidance to procurement practitioners and can help to better uncover anti-competitive agreements. In particular, practitioners should note the recommendation of a more intensive dialogue between public procurement and competition authorities in case of suspicious activity. The Bundeskartellamt explicitly calls on public procurement authorities to notify it in case of any suspicious behaviour, even if the behaviour itself seems fairly innocuous. The sum of any such notifications may enable the successful prosecution of bid rigging. In 2012, the Bundeskartellamt also invited competition authorities and public prosecutors from across Germany to enter into a dialogue with the aim of achieving a more efficient and effective prosecution of bid rigging.
In light of the OECD Recommendations it seems worth considering whether public procurement authorities should be included in this network to enable an even broader exchange of experiences, particularly as regards the adoption of pre-emptive measures. The Bundeskartellamt already laid the foundation for such a cooperation with the publication of the aforementioned checklist. The checklist not only provides public procurement authorities with important information on the detection of bid rigging, but it also encourages more effective communication with competition authorities and public prosecutors.
On the international level, the International Competition Network (ICN) – a worldwide association of more than 100 competition authorities from developed and developing countries – published a revised version of its handbook for the implementation of competition law in April 2015, which includes a chapter on the relationship between competition and public procurement authorities. The ICN recommends that its members observe and put into practice the OECD Recommendations. We are therefore cautiously optimistic that an increasing number of countries will take note of the OECD Recommendations in the future.
See Articles 42 VgV., 123f. ARC and 6e VOB/A-EU. An exclusion of a company from the tendering process is either mandatory or optional depending on the particular offence, cf. Stein/Friton/Huttenlauch, “Kartellrechtsverstöße als Ausschlussgründe im Vergabeverfahren”, WuW 01/2012, pp. 38 and 40.
Cf. Lange/Reimers in: Jaeger/Pohlmann/Schroeder, Frankfurter Kommentar zum Kartellrecht, 1st ed. 2006, p. 85., “D. Internationale Kooperation im Kartellrecht, insbesondere mit den USA”, para. 79f.; for a discussion of the OECD Guidelines (2009), please see: Reimers/Brack/Schmidt, “Kartellschadensprävention als Bestandteil der kartellrechtlichen Compliance”, CCZ 2016, pp. 83 and 86.
In contrast to the European Commission, Green Paper on the modernisation of EU public procurement policy. Towards a more efficient European Procurement Market. Wege zu einem effizienteren Europäischen Markt für öffentliche Aufträge, KOM (2011) 15 (final version), p. 36; European Parliament, Special Committee on Organised Crime, Corruption and Money Laundering, WORKING DOCUMENT of 3 December 2012, p. 8; Swiss Competition Authority (WEKO), Decision of 23 February 2015 on Investigation 22-0437 pursuant to Art. 27 KG regarding tunnel cleaning due to illegal anti-competitive agreement pursuant to Art. 5 Para. 3 KG,; Austrian Audit Court, Report on the procurement of the military communications system CONRAD, Bund 8/2015, pp. 175 and 220, http://www.rechnungshof.gv.at/fileadmin/downloads/_jahre/2015/berichte/teilberichte/bund/Bund_2015_08/Bund_2015_08_3.pdf (last accessed on 23 July 2016).
The OECD Guidelines are available at: http://www.oecd.org/daf/competition/cartels/42851044.pdf (last accessed on 23 July 2016); please see: Ulshöfer, Kartell- und Submissionsabsprachen von Bietern – Selbstreinigung und Schadenswiedergutmachung, in: VergabeR, 03/2016, p. 327.
For example: The “Fiscalia National Economica” in Chile published a brochure based on the OECD Guidelines; Mexico and the OECD published a report on bid rigging in Mexico in 2015; Barbados published “Guidelines & Checklists” based on the work of the OECD; the “Conseil de la concurrence” in Algeria published the OECD Guidelines in French; similarly, the competition authority in Denmark published the OECD Guidelines in Danish; UNCTAD also discussed the work of the OECD: Intergovernmental Group of Experts on Competition Law and Policy, Twelfth session, Geneva, 09–11 July 2012 TD/B/C.I/CLP/14,.
Please see: http://ec.europa.eu/competition/ecn/brief/05_2013/bidrig_it.pdf (last accessed on 23 July 2016).
The Anti-Cartel Enforcement Manual of the International Competition Networks contains a large number or real-life cases and examples of bid-rigging practices, cf. Annex 2 of the chapter on “The Relationships between Competition Agencies and Public Procurement Authorities” (April 2015).
See IV.2 below, especially regarding the situation where a public procurement authority instructs a private company to carry out preparatory work and that company subsequently wants to participate in the tender.
Art. 127 para. 5 ARC (revised edition); Art. 16 d para. 2 No. 2 VOB/A-EU; see also Higher Regional Court Düsseldorf, Order of 22 January 2014, VII- Procurement case 26/13; see also the rather strict decision of the ECJ, Decision of 24 January 2008, C-532/06 „Lianakis AE u.a./Plantiki AE“, paras. 36ff.; Decision of 12 December 2002, C-470/99 „Universale-Bau“, para. 99.
Art. 24 para. 5 VgV, Art. 50 para. 2 VgV, Art. 48 para. 1-3 VgV, Art. 50 VgV, Art. 56 para. 2 VgV, Art. 51 SektVO, Art. 26 para. 1 KonzVgV, Art. 6b para. 2 VOB/A, Art. 6b para. 1 No. 2, para. 2 VOB/A-EU.
For example, Art. 2 para. 5 VOB/A provides that a procurement authority should only tender a contract once it has finalised the procurement documentation and once it is clear that the contract can be performed within the stipulated time period.
German Federal Procurement Chamber, Order of 25 November 2014, VK 2 - 93/14; Higher Regional Court Düsseldorf, Order of 27 November 2013, VII-Verg 20/13; if this is not possible in exceptional circumstances, procurers may ask bidders to provide unit prices. These unit prices can later be multiplied with the required number of units (once determined).
There is no consensus in German case law as regards the permissibility of such joint bids. While the Court of Berlin has voiced concerns about such arrangements (see Court of Berlin, Decision of 20 February 2014, Procurement case 10/13, and Decision of 24 October 2013, Procurement case 11/13), the Higher Regional Court Düsseldorf has taken a more generous approach (Higher Regional Court Düsseldorf, Decision of 17.2.2014, VII- Procurement case 2/14.