COMPETITION COUNCIL: JOINT BIDDING OF TWO CONSTRUCTION FIRMS RESTRICTED COMPETITION

The Competition Council found that joint bids submitted by two Lithuanian construction firms UAB Irdaiva and AB Panevėžio statybos trestas (PST) restricted competition “by object”, in breach of Article 5 of the Law on Competition (national equivalent of Article 101 TFEU), as both firms could have bid separately. The fines imposed on firms amounted to EUR 3,685,900 and EUR 8,513,500 respectively.

Irdaiva and PST submitted joint bids in 24 public procurements for renovation and modernisation of schools and kindergartens in Vilnius, Lithuanian capital. Having assessed the experience of both companies in the construction sector, the scope of their implemented projects and the specifics of the market, the Competition Council found that both companies in the period of 2013-2015 could have participated in the public procurements separately. However, instead of competing, the undertakings presented joint bids, and thereby restricted competition. In particular, Irdaiva and PST agreed on how work and revenues would be shared between them in case of winning contracts.

According to the Council‘s Chairman Šarūnas Keserauskas, the investigation revealed that it was not objectively necessary for the companies to submit joint bids, since they both were capable of either submitting their bids individually or taking part in tenders in other ways that do not restrict competition. He noted that due to such joint bidding, the purchasing organisation did not have a chance of choosing from a higher number of strong competitors and getting better prices. According to Mr. Keserauskas, joint-bidding allows firms, which cannot submit their tenders individually, to pool resources and increase competition. Yet, this does not mean that undertakings, which are capable of participating in the bidding process independently, can use joint-bidding as a means to restrict competition.

The Competition Council carried this investigation in cooperation with the Public Procurement Agency.