On 12th June 2014, the Italian Competition Authority (ICA) opened an in-depth investigation into thirteen companies (the Accused Companies) providing polluting waste disposal services for alleged infringements of Article 101 TFEU, the prohibition of anti-competitive agreements.
The investigation stemmed from a complaint filed by the Italian entity “Direzione degli Armamenti Navali” (the Complainant), which alleged anti-competitive conduct during tenders made for providing waste disposal services in Taranto, la Spezia and Augusta.
Tender procedures are based on a lowest bid mechanism so that the invitation containing the lowest discount to a set price wins the tender.
The Accused Companies set up three joint ventures in order to make invitations to the tenders from 2011 to 2013, but each joint venture made invitations for different tenders without ever overlapping.
Therefore, the companies are accused of avoiding competing with each other for tenders. The ICA has pointed out that in the mentioned period the reduction in the discounts offered was too low in respect to the level of the discounts offered by the same companies before 2011 in similar tenders.
Therefore, the ICA alleges that this behaviour could not be the result of true competition and alleges that the Accused Companies had decided to illegally allocate markets by deciding the winner of the relevant tender before making invitations.
Through this strategy, the Accused Companies sustained far lower costs which they would have borne by competing. Such higher costs caused obvious damage to either the Complainant or the other competitors.
It proven, the conduct raises serious potential issues regarding its compatibility with European Union competition rules and specifically with Article 101 TFEU. In fact, any agreement not to compete with competitors would fall within the prohibition in Article 101 TFEU that forbids bid rigging and market allocation.
In our view, the investigation and scrutiny is welcome. If wrongdoing is found, the ICA investigation and subsequent enforcement action could be considered a high profile deterrent against bid rigging and allocating markets. However, the alleged wrongdoing is not proven at this stage and the investigation continues.