On the 24th of June 2015, the Danish Competition Council (DCC) held that a consortium (between LKF and Eurostar) which won a road marking bid was anti-competitive due to the fact that the consortium members could have made individual bids in a tender. The case has implications for any companies considering consortia bids in Europe.
The case started in March 2014 when the DCC received a complaint by one of LKF and Eurostar’s competitors that their cooperation in a public procurement bid for road marking in Denmark restricted competition. LKF Vejmarkering A/S (LKF) and Eurostar Danmark A/S (Eurostar) had entered into a consortium to make a joint bid in a public procurement put out by the Danish Road Directorate to mark the roads in most of Denmark for a four-year period, which they subsequently won.
As LKF and Eurostar were the largest and second largest contractors in the market for road marking respectively, the DCC found evidence to support that both LKF and Eurostar were capable of bidding individually and therefor they were actual and potential competitors. By being able to make stand-alone bids, the arrangement between the two companies reduced the number of competitors to bid in the public procurement, which may have have led to higher prices for the Danish Road Directorate.
Agnete Gersing, the director general of the Danish Competition and Consumer authority, said in a statement that “It can help to strengthen competition if companies together offer a task they individually are too small to solve. Conversely, a consortium is illegal if the companies will each be able to bid on the job, and cooperation in general does not provide significant efficiencies.”
As it was not necessary for the parties to collaborate in order to participate in the public procurement, the arrangement restricted competition, infringing Section 6 of the Danish Competition Act and Article 101 of the TFEU. The DCC consequently ordered the companies to end the consortium and refrain from entering into any arrangements which have the same or similar object or effect in the future.