The Catalan Competition Authority updates guide for detecting collusion in public procurement

The Catalan Competition Authority (ACCO) has published an updated version of the guide on the detection of collusive practices in public procurement. This guide has been adapted to the latest changes in competition and public procurement regulations, with the aim of providing public administrations with effective tools to detect anti-competitive practices in public procurement processes. Public administrations have a great capacity to influence competition in the markets. Therefore, ACCO provides tools to assist them in the effective detection of anti-competitive practices in public procurement processes. 

The guide recognises that collusive arrangements can take multiple forms, distinguishing the so-called "cover bids", suppression of bids to reduce the number of participants in the bidding process, subcontracting and bid rotation. It also addresses other relevant aspects, such as the promotion of fair competition and the implementation of mechanisms for reporting suspicious behaviours. 

Detection of collusive practice and leniency programmes

According to the ACCO, a vital part of its strategy to combat anti-competitive practices includes is not only active surveillance and investigations but also fostering an environment in which companies can self-report and cooperate with the authorities.

One of the tools for detecting collusive practices is the communication of indications by the contracting entities. Frequently, the investigation is initiated when the entities themselves communicate their possible suspicions to the authority in accordance with the provisions of article 150.1 of Law 9/2017, the Public Sector Contracts Law (LCSP).

The ACCO guide provides a list of indicators that can help entities to detect collusive practices in public sector tenders. Indicators include analysis of bids, of documentation submitted, price, and of behaviour and statements.

Analysis of bids

Entities should look out for strange patterns in the way companies bid and in their record of success and failure in public procurement processes.

Some signs to look for are lack of regular or winning bids, geographic distribution of winning bids, notoriously different bids for similar lots by the same bidder, rotation of awards in between the same companies, among others.

Analysis of submitted documentation

An examination of the documentation submitted by the companies could reveal signs of agreements between them. 

Some indications include similarities in the elements of the bids suggesting that they have been prepared by the same person or jointly, the presence of references to other bidders in the documents, as well as identical or similar metadata or properties.

Price analysis

Analysis of bid prices can also reveal indications of collusive practices. 

For example, price increases without apparent justification in repetitive bid rigging, similar prices among bidders but with different discounts, and bids with prices equal to the bidders' budget or with discounts that make it difficult to win.

Behavioural and statement analysis

During communications or meetings with bidders, it is important to look after their behaviour, as indications of collusive practices can sometimes be detected. 

Examples include statements by bidders justifying their prices based on suggested industry or market standard prices, the use of the same terminology to explain price increases, references to bids submitted by other competitors, and pre-bid meetings or regular meetings between competitors.

Leniency programme

On the other hand, it is often the very parties involved in anti-competitive practices that inform the competition authorities that such practices are taking place. 

In this sense, the ACCO highlights the importance of the leniency programme, regulated under articles 65.4 and 66.5 of the Law on the Defence of Competition (LDC), which offers exemptions and reductions of fines for those who contribute significantly to the detection of cartels and collusive practices. 

In addition, companies applying for leniency are also exempted from the prohibition of contracting applied under article 72.5 of the LCSP, this refers to the restriction imposed by article 71 of the same law on those who have been penalised for committing serious infringements related to the distortion of competition. 
 

Anti-competitive investigations

Specific investigations of anti-competitive practices have been launched into the travel agency market and in the market for engineering consultancy and technical assistance services. The National Commission on Markets and Competition (CNMC) has initiated investigations into anti-competitive practices related to public procurement that would affect the travel agency market and the consulting and technical engineering assistance market, marking the beginning of an investigation period that could last up to 24 months. 

According to press releases published by the CNMC, travel agencies could have shared clients and public tenders, as well as exchanged commercially sensitive information. Similarly, engineering consultancy and technical assistance services could have entered into agreements and concerted practices to share tenders issued for the provision of their services; in particular, these have involved the transmission and planning of information on road construction and operation.

These actions are investigated under article 1 of the LDC and article 101 of the Treaty on the Functioning of the European Union, both of which prohibit agreements between undertakings that prevent, restrict, or distort competition. 

The CNMC has indicated that, if the inspection reveals evidence of illicit activities, a process to impose sanctions will be initiated.

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