Membership in the Association of Croatian Travel Agencies may not be a prerequisite for bidding in a public procurement procedure

Following a series of queries received by a number of undertakings the Croatian Competition Agency (CCA) carried out a preliminary market investigation in the provision of tourist services, particularly involving the organization of school trips and other scheduled trips that are subject to public procurement rules.

With the view to promoting competition in the area concerned and eliminating of the barriers to entry in the provision of school trips and other scheduled trips services that fall under public procurement rules the CCA wants to comment on the results of this preliminary market investigation and on certain practices of schools, ministries and other organizations that purchase the services concerned that contravene with competition rules and principles.

Concretely, in one document made by one ministry and entitled “Call for tender for services involving the sale of travel tickets and vacation packages”  the CCA spotted the provision stating that the “…the bidder is obliged to attach to its bid the proof of its membership in the Association of Croatian Travel Agencies”.

The CCA established in its analysis that the Association of Croatian Travel Agencies is a professional association of the Croatian travel agencies but the membership in this association is not conditioned by any regulation or law, such as the Act on the Provision of Travel Services or similar. Thus, this is a private association, the travel services providers are free to join it and the membership is in no way obligatory or a prerequisite for the provision of the services concerned.

Taking the above said into account, the CCA wants to draw the attention of the buyers of these services, particularly in the area of organization of school trips and other organized travels that fall under the public procurement rules that the membership in the Association of Croatian Travel Agencies cannot be a prerequisite for bidding and taking part in the public procurement procedures.

In other words, putting this condition in the tender puts at the same time other undertakings who are not members of the Association of Croatian Travel Agencies, or any other similar professional associations, at a competitive disadvantage who are so denied access to the market concerned and such a practice is contrary to the principle of equal treatment.

In order not to exclude a certain bidder or a group of bidders from the point of competition rules it is necessary to ensure equal conditions for access to and participation in the market whereas the award criteria should be weighted as to ensure the best price-quality ratio of the services where each potential tenderer can make a bid under equal conditions.

Therefore, it is desirable for the contracting authority to set the criteria of the tender so as to avoid erecting any barriers to entry and linked to the subject-matter of the contract, such as a condition of membership of the bidder in any association or the possession of any powers or certificates that such an association would issue to its members, or creating any other conditions that incur unjustifiably high costs for the economic operators who are not members of such associations.

On the other hand, the CCA also analysed the writing that the Association concerned communicated to all elementary and secondary schools recommending its members who are “specialized in school trips”. The writing explains how since 2012 the Association has provided specialization for its members including specifically defined criteria that are tested on a two-year basis. The results of these tests are certificates that the Association awards to its members – travel agencies that introduced a quality management system and committed themselves to high quality service provision that will be permanently improved.

The CCA found in its analysis that this writing raised no competition concerns. In the words of the CCA, this can be regarded as a normal practice of professional organizations whose purpose and goal is to promote and represent the interests of its members. Thus, this writing that was sent by the Association to elementary and secondary schools can be regarded as a promotional activity in favour of its members who are specialized for school trips. Attached to the writing was also a brochure introducing its members, a practice that cannot be regarded as anticompetitive.