The Competition Council (the CC) has concluded a negotiation procedure with the Local Government of the State City of Jelgava and its institution "Pilsētsaimniecība", finalizing an investigation into the non-compliance of the local government and the institution with requirements of the Competition Law in the procurement of services for daily maintenance of public territories. As a result of the discussions, the municipality and its authority have committed to follow the recommendations of the CC in the future in order to avoid risks of competitive neutrality in future procurements.
The CC's investigation concluded that one operator has been providing routine maintenance services for public areas in the territory of the municipality for a long time. At the same time, the set of requirements for procurement No JVP 2022/94/AK regarding the professional qualifications and experience of the tenderer and its staff ensured that only the specific economic operator, which was the sole tenderer in the procurement, was able to compete for the award of the contract. The CC found that potential tenderers, that is, other operators in the sector that regularly participated in and were awarded contracts in this type of procurements organised by other public entities, had assessed the feasibility of participating in the procurement but did not submit tenders in view of the qualification and experience requirements for the tenderer's staff.
Also, the CC, in the framework of the negotiation procedure, pointed out to the municipality and its authority the need for a thorough market study to identify the potential tenderers before launching the procurement and to reduce the risk that unjustified restrictions might be included in the procurement documentation.
In order to promote competition between operators in the field of street and road maintenance as well as in the field of cleaning and maintenance of territories (parks, greenery), the CC invited the local government and the institution to review the current practice and to assess the possibility of dividing this type of procurement into lots, for example for the provision of street and road maintenance services and for maintenance or greening of municipal public territories.
The CC concluded that as a result of the negotiations, compliance with the Competition Law will be ensured in the future, based on the commitment expressed by the Local Government of the State City of Jelgava to take into account in future procurements the considerations expressed by the CC regarding the respect of competition neutrality, while ensuring both free competition for service providers and quality living conditions for the residents of the municipality. The investigation into the matter was therefore closed.
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Public bodies - state and municipal authorities, as well as capital companies owned by them - are prohibited from preventing, restricting or distorting competition. The prohibition entered into force on 1 January 2020 and is set out in Section 14.1 of the Competition Law..
In order to ensure compliance with the requirements of the Law, the Competition Council conducts negotiations with the public bodies or the capital company owned by it. If the negotiations do not result in compliance with the requirements of the Law, ensuring an outcome that encourages competition, the Competition Council may, in the case of publicly owned capital companies, continue the investigation of the infringement by adopting a decision on finding an infringement, imposing a legal obligation and a fine.
A capital company owned by a public body may be fined up to 3% of its net turnover for the last financial year, but not less than EUR 250.