Medical gases companies not engaged in a cartel

The Croatian Competition Agency (CCA) established that the undertakings Messer Croatia Plin Zaprešić, UTP – Uljanik Tehnički Plinovi Pula and Istrabenz Plini Bakar participated in a public procurement procedure for the purchase of medical and non-medical gases carried out by the Clinical Hospital Merkur did not engage in a prohibited agreement and therefore did not infringe competition rules.

The Clinical Hospital Merkur was appointed the central public procurement authority for the purchase of medical and non-medical gases, 23 medical institutions participated in the bidding, including the ones that joined voluntarily.

In the course of the proceeding the CCA found that that the establishment of joint bidding with the purpose of meeting the requirements listed in the tender was justified for several reasons.

First, the tender was not divided on the basis of the group of products (medical and non-medical gases). Therefore, the possibility for the potential bidders that produce only non-medical gases to appear independently was excluded. In addition, obligatory bank guarantee had to be attached to the bid, which could not be provided by Istrabenz or UTP alone.

Second, at the time of the call for tender only Messer had a license for the production of medical oxygen. Only the medical oxygen supplied by this producer was registered as a medicine and could be marketed in the territory of Croatia. Given that one of the requirements of the tender was the delivery of any of the products listed in the tender within 72 hours to any of the medical institutions included in the tender showed that only Messer was capable to bid on a stand-alone basis, in which case the market would have been left closed for other two bidders.

However, although Messer was the only one that met the requirements of the tender it assumed that if it had bided alone it would have not been economically viable on the account of the fact that its costs would have been much higher. First of all, it would have to replace the containers of other companies by its own in the hospitals that it had not supplied before. Besides, it would have borne additional costs taking into account the fact that the hospitals that had to be supplied in 72 hours are scattered across the territory of Croatia.

On the other hand, in compliance with the tender the consortium had to offer the same prices of products, uniform for all the hospitals that were covered by the tender. In this context it was unavoidable that the uniform price differed somewhat from the prices that Messer, Istrabenz and UTP previously agreed with individual hospitals.

The CCA notes here that joint bidding as such does not contravene with competition rules in public procurement procedures. However, any agreement between the members of the consortium that has as its object or effects the prevention, restriction or distortion of competition is prohibited. Thus, the bodies that carry out public procurement procedures must pay special attention when they specify the requirements of the tender so as to leave as little room as possible for potential anticompetitive practices. In setting up the requirements of the tender the contracting authority must take into account the nature of the relevant market, the specific features of the operators in this market, their number, nature of business, the relevant prices for the products concerned etc. The participation requirements adequately defined are the prerequisite for a legal implementation of the public procurement. Well defined participation requirements can even strengthen competition between the bidders, for instance, where different types of products are divided in several public procurement procedures, where the public procurement procedure is divided into several groups depending on the duration of the agreement or similar, all that with to view to increasing the number of potential bidders.