News

Restoration of credibility – a possibility for bid-rigging participants to participate in procurements

(29.03.2017.)

In this year, the Competition Council of Latvia (the CC) has issued a positive opinion on the possibility to regain their credibility and exemption from one-year prohibition to participate in public procurements to two companies, which were previously fined for involvement in a cartel agreement. In the last year, when amendments to the regulatory framework on public procurements came into force, the CC issued eight positive opinions on the possibility to restore credibility.

The companies regarding which the CC has detected an infringement of participation in a bid-rigging, and which are not exempted from the fine, or where the fine is not reduced within the leniency programme, are imposed a one-year prohibition to participate in public procurements. However, starting from 2016 such companies are entitled to implement specific measures to prove their conformity for restoration of credibility and ability to eliminate repetition of the same or similar infringements in the future.

In 2016, the CC issued a positive opinion to eight companies, for five of which the authority decision became final – after termination of court proceedings on involvement in a prohibited agreement among 26 energy constructors, which was detected by the authority in 2013.

In order to receive a positive opinion of the CC, a company shall implement specific measures, including payment of the imposed fine, or shall provide sufficient guarantees, that it will be paid, if the CC has agreed for payment of the fine in instalments. A company shall also cooperate with the CC during and after investigation of infringement, develop a corporate competition law compliance program and train its employees in order to prevent repeating of the same or similar infringements in the future etc.

The Chairwoman of the CC Skaidrīte Ābrama: “Restoration of credibility can be referred to as a preventive form, which allows achieving the objective of a fine – to compensate loss caused by the infringement and to educate organizations about competition law, and to prevent possibility of repetition of such infringements. Education of company employees potentially reduces the possibility that a similar infringement will be repeated in the future, and, respectively, the competition culture is improved and more fair procurement environment in general is ensured.”

An opinion of the CC on restoration of credibility has no binding force, it is not subject to appeal and the decision on whether to allow a company to participate in procurements is made by the organizer of public procurement. Namely, if the organizer recognizes, that implemented measures are sufficient, the company may be allowed to participate in the procurement. Whereas, if the procurement organizer holds a view, that implemented measures are insufficient to restore credibility, it can make a decision on exclusion of the applicant from further participation in the procurement procedure.