In a settlement decision on May 2 2017, the Belgian Competition Authority (BCA) imposed total fines of €1.8 million on five undertakings involved in a bid-rigging cartel in Belgium. The decision relates to a public tender launched in 2008 by Infrabel, the Belgian railway infrastructure operator. The tender was for the delivery and onsite installation of electrical circuit equipment and related technical assistance.
The contract was awarded in two stages. During the first stage, Infrabel selected five companies and concluded a framework agreement with each one. Framework agreements were concluded with Siemens, Sécheron, ABB, AEG and Schneider. During the second stage, Infrabel launched calls for specific orders. In the context of each call, the selected parties had to submit offers which did not exceed the initial maximum price offered. The undertaking which offered the best price in the second stage received the order.
There were no indications of collusive tendering in the first selection stage, even though the file referred to contact between some of the parties concerned. However, when calls for tender were made in the next stage, it turned out that the five competitors had agreed in advance which one would obtain the contract. This allocation was made on the basis of the preferences of each company and on the basis of the preferences of Infrabel, which preferred a certain standardisation per zone. In order to guarantee that the selected undertaking would actually win the tender, the five companies exchanged prices and agreed that either the selected undertaking would lower its price in comparison to the prices offered by its competitors, or the non-selected undertakings would all increase their prices.
In its decision, the court noted that Infrabel's behaviour had contributed to the collusion. Infrabel had made the market transparent and had shared sensitive information with the companies concerned.
The existence of the cartel was revealed to the BCA by one of the cartel participants, ABB, which in exchange was granted full immunity from fines. Siemens and AEG followed suit and were both granted significant fine reductions as a result of their requests for leniency. The reduction granted to Siemens was particularly striking as Siemens was held to be the ring leader of the cartel.
The BCA took both aggravating and mitigating factors into account when calculating the fines. Siemens' fine was increased due to its role as cartel leader. It was determined that:
- a member of Siemens' key personnel had organised multiple meetings and facilitated the exchange of information between the different cartel members;
- Siemens acted as moderator in case of conflicts or discussions regarding the distribution of the different calls for tender; and
- Siemens had occasionally assisted in the price-setting process.
Infrabel's role in the cartel was considered to be a mitigating factor. The BCA noted that Infrabel's staff had increased the market's transparency beyond a level that was considered appropriate in the context of a public tender process. In particular, Infrabel held meetings with the five companies in which sensitive information was exchanged, including information about:
- existing and future projects;
- prices offered by competitors; and
- Infrabel's preferences for certain suppliers.
The BCA established that by agreeing which undertaking would obtain each call for tender and by exchanging and fixing their prices accordingly, the five companies concerned formed a cartel with the object of distorting and limiting competition on the Belgian market. The cartel lasted between five and six years.
This decision is another testimony for the BCA's interest in detecting and sanctioning anti-competitive practices in public procurement. In January 2017 the BCA published a guide for contract authorities to help them to detect possible bid-rigging practices. In addition, in its 2017 priorities note, the BCA expressed its intention to tackle bid-rigging practices. On an annual basis, Belgian contracting authorities launch public tenders worth approximately €50 billion, which represents 10% to 15% of Belgian gross domestic product. The BCA considers public procurement to be particularly susceptible to cartelisation.
Further, new rules on public procurement have recently come into force in Belgium. These rules expand the contracting authorities' powers to detect and sanction anti-competitive behaviour by participants in public tenders.
For further information on this topic please contact Koen Platteau and Nina Mampaey at Simmons & Simmons by telephone (+32 2 542 0960) or email (email@example.com or firstname.lastname@example.org). The Simmons & Simmons website can be accessed at www.simmons-simmons.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.