The Netherlands Authority for Consumers and Markets (ACM) has imposed fines, totaling 330,000 euros, on four construction companies for concluding illegal arrangements in three tender processes in the civil-engineering sector in the municipality of Amsterdam. In one or more tender processes, these companies coordinated what bids they would submit. That is illegal. Companies are supposed to compete with each other for these contracts. ACM seeks to ensure fair competition in tender processes, and takes action if competition is distorted.
Martijn Snoep, Chairman of the Board of ACM, comments: “It is extremely important in tender processes that companies compete with one another for those contracts. The client decides who will win the contract, not the bidders among themselves. If competition is distorted, it will result in higher prices, reduced quality, and less innovation. Making any sorts of arrangements regarding bids in tender processes violates the Dutch Competition Act.”
What was this case about?
The municipality of Amsterdam had invited four contractors to submit bids in one or more tender processes for three civil-engineering projects in Amsterdam. These tender processes involved relatively small projects. Several firms submitted bids to keep themselves ‘in the picture’. They were afraid not to be invited anymore to subsequent tender processes if they did not respond to the tender invitation for these projects. They submitted bids, even though they did not want to win the contracts. That is why they coordinated with the other bidders in advance the prices they would submit as bids. This is prohibited under the Dutch Competition Act. These four companies acknowledged that they acted in violation of the rules by coordinating their bids in advance. They accept the fines that ACM has imposed on them. They have taken measures in order to comply with the rules in the future, so that tender processes such as these will take place fairly. One of the contractors is paying compensation to the municipality. That is why ACM has lowered the fine on this contractor by 10%.
Rules in tender processes
Clients set up tender processes in order to get the best price-quality ratio for their contracts. In that way, tender processes also stimulate innovation. Businesses compete with each other in order to get the contract. That is why businesses must determine their bids and prices independently from the other bidders.
If businesses wish to submit bids in a tender process, what should they keep in mind?
- Businesses cannot discuss their participation with competitors, and they cannot even ask if others also take part, or give an answer to such a question from a competitor.
- Businesses must determine their prices completely independently and without consulting their competitors.
- Businesses cannot coordinate with competitors which of them will participate in what tender processes.
- Businesses can only work together with competitors if certain conditions are met.
Businesses that violate competition rules can be excluded from participating in future tender processes. More information about this can be found on the site of PIANOo , the Dutch Public Procurement Expertise Centre.
Rules for taking part in tender processes (in Dutch)