Transcript Slide 1

BID RIGGING IN PUBLIC PROCUREMENT
ICN 2015 CONFERENCE PROGRAM
CANI FERNÁNDEZ
SYDNEY, APRIL 30TH, 2015
BID RIGGING IN PUBLIC PROCUREMENT:
THE SPANISH CASE
BID RIGGING IN PUBLIC PROCUREMENT - SPAIN
INDEX
i.
An introduction to bid rigging practices in Spain.
ii.
CNMC precedents.
iii. Relevant Case Study: S/0316/10 Paper Envelopes.
iv. Public procurement regulation and practical issues.
v.
Future development and recommendations in public procurement in
Spain.
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BID RIGGING IN PUBLIC PROCUREMENT - SPAIN
AN INTRODUCTION TO BID RIGGING PRACTICES IN SPAIN
Public procurement in developed countries exceeds 15% of GDP,
accounting for approximately 18,5% of GDP in the case of Spain. That is,
€194 billion a year, or more than €4,100 a year per capita, but…
…the absence of the necessary competitive pressure may lead to average
overshoots of (estimated) 25% of the budget in public procurement. In
Spain, in aggregate, this could mean as much as 4.6% of annual GDP,
approximately €47.5 billion a year, or more than €1,000 a year per capita
is inefficiently spent.
Sources: “Evaluation Report Impact and Effectiveness of EU Public Procurement Legislation”, European Commission, 2011; “Public
Procurement Indicators 2011” and “Public Procurement 2012”, European Commission 2012 and 2014.
Data from Spain’s Procurement Observatory, Spain’s National Statistics Institute (INE) and Transparency International.
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BID RIGGING IN PUBLIC PROCUREMENT - SPAIN
CNMC (SPANISH COMMISSION FOR MARKETS AND COMPETITION)
PRECEDENTS
Common characteristics

S/0329/11 Asfaltos de Cantabria

S/0453/12 Rodamientos Ferroviarios (*)
i.

S/0429/12 Residuos

S/0473/13 Postes de hormigón
ii.

S/0226/10 Licitaciones de carreteras

S/0316/10 Sobres de Papel (*)
iii.
iv.
(*) Application of the leniency program
All were mature markets. Mostly
related to the construction sector.
The lifespan of the cartels was long
(averaging 17 years per cartel).
Cartels facilitated market allocation
and helped crystallize the status
quo.
None of the files originated from a
complaint by a public
administration.
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BID RIGGING IN PUBLIC PROCUREMENT - SPAIN
RELEVANT CASE STUDY: S/0316/10 PAPER ENVELOPES
The companies that took part in the cartel shared out the Spanish paper envelopes
market amongst themselves between 1977 and 2010. The cartel affected:
(i) Public tenders for both electoral envelopes and envelopes for the mail shots
delivered by the political parties.
(ii) Tenders and contracts with large public customers (i.e. The State Tax Agency, The
General Social Security Treasury, The Directorate General of Traffic, The Directorate
General for the Police, most of the Ministries, etc).
(iii) Tenders and contracts with large private customers (i.e. financial institutions,
electricity companies, telecommunication companies, etc).
(iv) Blank envelope customers.
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BID RIGGING IN PUBLIC PROCUREMENT - SPAIN
RELEVANT CASE STUDY: S/0316/10 PAPER ENVELOPES
Particularities of the case:
The leniency program was essential to exposing the cartel, but…
i.
The case demonstrated that cartels of such significance can go unnoticed during
decades (33 years in this particular case).
ii.
It’s not just a public sector problem: both public and private bid processes were
rigged.
iii.
Other antitrust mechanisms failed in detecting the cartel (collaboration from
public administrations, for instance).
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BID RIGGING IN PUBLIC PROCUREMENT - SPAIN
PUBLIC PROCUREMENT REGULATION AND PRACTICAL ISSUES
The Spanish Law on Public Sector Contracts states that all contracting public entities
and public contract supervisors are obliged to notify the competent Competition
Authorities of any facts that may constitute an infringement of competition legislation.
Main concerns:
i. Public entities lack experience and specific knowledge in detecting anticompetitive
behavior.
ii. The contracting public entities cannot reject bids nor desist from contracting on the
basis that the bids are rigged.
iii. There are no clear incentives for the contracting public entities to contact
Competition Authorities. Uncertainty with regards:
How existing contracts should be treated if investigated by the Competition
Authorities.
-
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How to deal with companies which are being investigated for alleged bid rigging.
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Contacting the Competition Authorities may hinder the bidding process.
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BID RIGGING IN PUBLIC PROCUREMENT - SPAIN
FUTURE DEVELOPMENT AND RECOMMENDATIONS IN PUBLIC
PROCUREMENT IN SPAIN
Some recommendations to ensure competition in the public procurement process:
i.
Intensify antitrust awareness amongst public administrations acting
contracting bodies and promote cooperation with Competition Authorities.
as
ii.
Establish cost audits to estimate competitive market prices when preparing
tender budgets.
iii.
Set up a specialist outside body that could evaluate the economic efficiency and
level of competition of procurement procedures.
iv.
Establish and design massive databases for the purpose of overseeing public
procurement.
v.
Implement a more extensive use of electronic procedures in public procurement.
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THANK YOU FOR YOUR ATTENTION
Este documento es meramente expositivo y debe ser interpretado conjuntamente con las explicaciones y, en su
caso, con el informe elaborado por Cuatrecasas, Gonçalves Pereira sobre esta cuestión
This document is merely a presentation and must be interpreted together with any explanations and opinions
drafted by Cuatrecasas, Gonçalves Pereira on this subject
Este documento é uma mera exposição, devendo ser interpretado em conjunto com as explicações e quando seja
o caso, com o relatório/parecer elaborada pela Cuatrecasas, Gonçalves Pereira sobre esta questão