CCA closes 2016 with a Guide for contracting authorities in detecting and tipping-off bid-rigging cartels in public procurement

The Croatian Competition Agency closes the year 2016 with a project that is an important part of its competition advocacy activities under the Competition Law – the Guide for contracting authorities in detecting and tipping-off bid-rigging cartels in public procurement. Beside its enforcement activities the past year of the CCA staff was also marked by the work on the drafting of two legal proposals – the Act on Actions for Damages for Infringements of Competition Law and the Act on Unfair Trade Practices.

The Guide was prepared and published by the CCA experts on the web site of the CCA and as a booklet that will be distributed to the contracting authorities involved in public procurement on various occasions with the view to helping them detect bid-rigging cartels.

Bid-rigging cartels eliminate competition and counteract the purpose of public procurement. They lead to reduced competition, higher prices and less quality. It is therefore an important task to detect these prohibited agreements in the public procurement procedures where public procurement and effective competition exist side by side. The bid-rigging activities are considered to bring most serious harm; they may be operating for a long period of time and are rather difficult to be spotted given their various forms and patterns.

In accordance to the statistical data on public procurement in Croatia the contracting authorities realize transactions that account for some 15% of GDP in public procurement procedures. Given the high GDP share it is even more important that procurement officers detect and reduce the risk of bid-rigging cartels. Bid-rigging cartels harm the economy and undermine procurements, which adversely affects the prices and increase the costs for the state and the local and regional administration units.

In the context of competition rules it is essential for the participants in the public procurement procedure, particularly the contracting authorities, to be able to detect the signs that point at possible bid-rigging or collusive tendering.

The surveillance of public procurement activities is therefore indispensable especially where the abuse of these rules eliminates competition. Thus, there are many countries across the European Union, including the OECD-countries who take this issue seriously and have already published similar guides or brochures. Their practice was followed by the CCA in the drafting of the Croatian Guide.

In order to detect and report about the bid-rigging cartels it is necessary to train all the participants in the public procurement procedure about the suspicious forms, behaviours and patters of bid-rigging agreements. Only the trained participants will be able to detect unsound behaviour and the signs that the undertakings who infringe competition rules leave behind in the tendering procedure. Here the public administration officers as well as the undertakings involved play a very important role in detecting and sanctioning the risks linked to bid-rigging cartels in public procurement because they help the competent authorities to eliminate cartels and optimize use of the tax payer’s funds effectively.

The CCA Guide is therefore a clear set of questions and answers for contracting authorities about the possible suspicious signs that may point at a bid-rigging cartel or collusive tendering. Some of the infringements are illustrated by a number of examples whereas the contracting authorities are given certain guidelines in reducing the risks of bid-rigging in public procurement.

The printing of the CCA Guide came in chorus with the adoption of the new Croatian Public Procurement Act that entered into force on 1 January 2017. In the forthcoming period the competent Ministry of the Economy and Entrepreneurship plans to organize a series of training programmes for undertakings and contracting authorities with the objective of making the new public procurement rules known to the parties concerned. Therefore, we believe that the CCA Guide comes at the right time and that it will qualitatively contribute to the training of the public officials in the area of proper application of public procurement rules.

Finally, the CCA notes here that within the meaning of Article 254 of the Criminal Code it is not empowered to sanction possible abuse in the public procurement procedure, such as prohibited agreements between the contracting authorities and the bidders where any suspicious signs should be reported to the State’s Attorney Office of the Republic of Croatia.

The CCA Guide can be downloaded here:

http://www.aztn.hr/uploads/documents/brosure/vodic_za_narucitelje.pdf

Its printed version will be distributed by the CCA.