Elusive Collusion

Legal or Not?

Legal or Not?

The Polish Office of Competition and Consumer Protection (UOKiK) contends that companies may act in collusion when establishing a consortium, the regional court in Warsaw claims that collusion can only occur when separate bids are submitted, whilst lawyers specialising in competition and public procurement procedures recommend a middle-of-the-road approach. The consequences of collusion are severe, including bid rejection, financial penalties up to 10% of a company’s annual revenues and up to a five-year ban on participation in public tenders; therefore, businesses find UOKiK’s precedent decision of December 2012 disquieting. UOKiK argues that if potential contractors were able to submit separate bids in a tender, yet they chose to establish a consortium and present a joint bid, they might be acting in collusion. The regional court in Warsaw, in its ruling of 10 March 2015, countered that anti-collusion regulations did not apply to consortia. Lawyers are not fully convinced by either interpretation and caution against falling into extremes. Their advice is to decide case by case whether or not competition rules have been infringed. Public procurement regulations expressly permit bidders to set up consortia and in some tenders this is indeed the only way for companies to meet stringent requirements. When companies acting on their own are unable to guarantee the expected performance owing to insufficient expertise or resources, joining forces seems an obvious choice. A slightly more nuanced, albeit equally legitimate, case of a joint bid occurs when each company has the necessary capacity, but with its existing resources partially engaged in other projects, a separate bid would not be profitable. By contrast, when a consortium is established in order to divide the relevant market between the only or dominant players with the potential to bid separately, competition concerns can validly be raised.
Gazeta Prawna

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