The recently adopted Hungarian Public Procurement Act (“PPA”) was again amended with effect from 15 June 2016 in respect of the exclusion ground relating to the violation of the prohibition of agreements and concerted practices restricting competition (“Amendment”). 

Under the most recent version of the PPA companies that have been found to infringe the prohibition of agreements and concerted practices restricting competition under Hungarian law or Article 101 of the Treaty on the Functioning of the European Union and were subject to a fine, were banned from participating in public procurement procedures for a period of 3 years. As a result of the Amendment market players otherwise falling under the above exclusion ground may be still exempted subject to a discretionary Government decision. 

According to the procedural rules set out in the Amendment, if, before launching a tender a contracting authority (“CA”) finds that the majority of economic operators active in the relevant market affected by the tender would fall under the abovementioned exclusion ground, the CA may submit a request to the Government for individual derogation from the mandatory exclusion. Should the Government establish that the derogation would be required to ensure competition in the relevant public procurement procedure, it may grant derogation in an individual resolution. 

The Amendment is aimed at providing a practical “solution” for tenders in sectors (e.g. financial services, construction, pharmaceutical industries) affected by multiple and extensive investigations by the Hungarian Competition Office in the last years and where the vast majority of market players are subject to an infringement decision also involving the imposition of fines and are therefore banned from participating in public procurement procedures. 

Interestingly, the application of the exclusion ground relating to anti-competitive practices is optional according to Article 57 of the new public procurement directive (Directive 2014/24/EU), but Hungary nevertheless chose to transpose it as a mandatory exclusion ground. Now it seems that practice has shown that such strict implementation may not be feasible and the Parliament has decided to relax the rules. 

The Amendment provides the CAs with the opportunity to have competitive tenders in sectors where the majority of the economic operators would otherwise be banned. This is, however, limited to specific tender procedures and is subject to the CA’s initiative and the Government’s discretionary decision. This option is available for tenders to be launched in the future, i.e. after the coming into force of the Amendment. 

Irrespective of the Amendment, if an economic operator wishes to acquire general admission to public procurement procedures despite falling under one or more exclusion grounds, we recommend initiating a so-called “self-cleaning” procedure if it is permitted under the PPA. In connection with the “self-cleaning” procedure please find more details here.