Romania: The Competition Council Keeps An Eye On Bid-Rigging

In 2013, the Romanian Competition Council finalised five investigations concerning bid-rigging infringements (amounting to almost a quarter of the authority's investigations on competition law infringements), of which one led to fines of EUR 2.8 million and the other four were closed for lack of evidence. Last year, the competition authority also launched two new investigations on possible bid-rigging infringements. The average duration for investigation of this type of infringement is approximately two years.

In the recent years, the Competition Council has focused a significant part of its resources to the fight against bid-rigging and also for its prevention. 

The illegal practice of bid-rigging exposes the concerned undertakings to fines of up to 10% of their total annual turnover; in addition, the involved individuals (such as managers, legal representatives of the company or any other individuals that hold management positions) may face criminal charges (the felony of misappropriation of public tenders provided for in the Criminal Code is sanctioned with up to five years of jail-time). Moreover, unlike the other competition law infringements provided for in Article 5 (correspondent of Article 101 TFEU) of the Competition Law no. 21/1996, in Romania, the undertakings involved a bid-rigging infringement may not apply for leniency and the involved individuals cannot seek immunity from criminal liability. 

Bid-rigging is considered a serious per se infringement, so a participating undertaking can be sanctioned even if it was not declared the tender's designated winner.

This infringement is founded on secret understandings between competing undertakings taking part in tender procedures with the aim of raising the prices and/or lowering the quality of the products/services that are acquired through the tender. Certain methods are practiced in order to commit fraud in tenders: cover bidding - agreeing to submit a bid that is higher than the bid of the designated winner or which is known to be too high to be accepted; bid suppression – participants agree to refrain from bidding or to withdraw submitted bids; bid rotation – participants agree to take turns in winning in a series of tenders; market allocation – participants agree not to participate for certain clients or for certain geographic areas, or combinations of such. Undertakings may be sanctioned for bid-rigging irrespective of their form of participation, individually or as part of an association.

Certain economic sectors are prone to such anti-competitive agreements due to such factors as few competitors on market, high entry barriers, constant demand/little or no market uncertainty, repetitive bidding, identical or similar products/services, etc. In recent years, Romania's competition authority has been very active in the bid-rigging segment and has sanctioned important bid-rigging infringements such as the maintenance services for gas networks tender, road marking services tender and the ammunition tender.

The Competition Council's investigations may be launched ex officio (even as a result of a sector inquiry), following a complaint from a participant who believes that the tender was rigged, or even a complaint from the entity which organised the tender. In order to detect rigged bids, the competition authority cooperates with other public authorities and, for this purpose, founded the Bid-Rigging Module (MLT) in 2010. Under this structure, the Competition Council's experts cooperate and exchange information with representatives of the National Authority for Regulation and Monitoring of Public Acquisitions, the Public Acquisitions Verification and Coordination Division, the National Council for Solving Complaints, the Prime Minister's Control Body, the Romanian Court of Accounts, the Prosecutor's Office attached to the High Court of Cassation and Justice (Romanian Supreme Court), and the Antifraud Division.

Considering that direct evidence for this type of competition law infringement is almost always nonexistent (participants in a bid-rigging scenario will almost certainly not conclude a written agreement), the competition authority relies heavily on circumstantial evidence. For this purpose, the Competition Council uses the dawn raid as its primary weapon of searching for evidence and looks primarily for communications (especially emails) between the suspected participants to the infringements, any hand-written notes by the undertakings' representatives at the tenders, files and documents drafted for the purpose of tenders, etc. As a fact, in one previous case, the competition authority argued that certain competing companies colluded for a tender because the documents they (individually) submitted for the tender had several identical typing and formatting errors, something the Competition Council did not regard as coincidental.

Possible leads for identifying anticompetitive behaviour may exist with regard to prices (or other commercial conditions) offered during the tender, any communications from and between the competing companies with regard to the tender, companies' behaviour in previous (similar) tenders, the fact that two or more participants were represented for a tender by the same individual, etc. Another sign may be the fact that subsequent to a tender, the designated winner transfers/sub-contracts the agreement (or parts of it), which represented the tender's object, to other participating companies (this practice was observed by the Competition Council in the road marking services tender).

In order to prevent competition law infringements with regard to tenders, firms are well-advised to avoid any communications with competing companies with regard to upcoming tenders in order to reduce the risk of exchanging sensitive information. Also, firms should be aware of communications made prior to tenders that might contain or address sensitive information (such as prices, commercial conditions, products / services to be offered) – these communications might also be caught by the competition authority's antenna.

The Competition Council can also base its case on evidence gathered from other participants. The fact that the authority did not find evidence at one of the suspected participants does not necessarily exclude that undertaking from being sanctioned. Also, the Competition Council may investigate possible infringements concerning both public tenders (public acquisitions) and private tenders.

Identifying bid-rigging remains a priority on the Competition Council's fight against competition law infringements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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