When organising procurement procedures, public entities – the state, local governments and their capital companies – should carefully consider that the requirements they set out encourage as many bidders as possible to participate, thus ensuring efficient use of public funds. The Competition Council (CC) held discussions with SIA “Vidzemes slimnīca” (Vidzeme Hospital) to promote competition in its future procurement of laundry and dry cleaning services.
The CC received a complaint about the 2023 procurement of laundry and dry cleaning by SIA “Vidzemes slimnīca”, in which only one tenderer – the contractor of the previous contract – had applied, drawing attention, among other things, to the trend of the decline in competition in the hospital’s procurement.
The CC conducted an in-depth investigation of the complaint and analysed all procurements organised by SIA “Vidzemes slimnīca” related to the provision of laundry and dry cleaning services and the requirements set out therein in general, assessing both the qualification requirements set for tenderers and the solutions provided for the provision of laundry logistics. In order to prevent potential competition risks, the CC held discussions with SIA “Vidzemes slimnīca”, calling on them to review the compliance of their procurement practices with the principles of public procurement and to implement measures to promote competition in future procurements.
During the negotiation procedure, SIA “Vidzemes slimnīca” confirmed that it will review the wording of the experience requirements in future procurements of laundry and dry cleaning services. At the same time, SIA “Vidzemes slimnīca” undertook to assess alternative options for a more environmentally friendly procurement, as well as to consult with market participants and the CC before announcing further procurements. In the light of the assurance given, the CC concluded the negotiation procedure initiated with SIA “Vidzemes Slimnīca”.
Public entities – state and municipal institutions, as well as capital companies owned by them – are prohibited from hindering, restricting or distorting competition. The prohibition entered into force on 1 January 2020 and is laid down in Section 14.1 of the Competition Law.
To ensure compliance with the law, the CC negotiates with the public person or its holding company. If the negotiations do not result in compliance with the requirements of the Law, ensuring a pro-competitive outcome, the CC may continue the investigation of the infringement in respect of capital companies owned by public persons by adopting a decision on the finding of an infringement, the imposition of a legal obligation and a fine.
A capital company owned by a public person may be fined up to 3% of its net turnover in the last financial year, but not less than EUR 250.