The Competition Council (CC) has made a decision to close the investigation of a possible prohibited agreement in public procurement in the catering services sector by establishing a joint venture between competing market participants and participating in the procurement as a union of persons. In the course of the investigation, the CC obtained conclusive indications that the undertakings had not acted unlawfully and decided to close the case without finding an infringement of the Competition Law.
In February 2024, the CC opened an investigation following a complaint from a public contracting authority alleging prohibited agreements between bidders. The contracting authority raised concerns about the union of persons “Aleks un V Concord Service Group CNC” formed by the market participants SIA ALEKS UN V (AV) and SIA Concord Service Group (CSG), participating together in a procurement for the provision of catering services through a jointly formed company SIA CNC. The CC notes that AV and CSG are considered to be competitors and were able to bid individually before the creation of the joint venture.
Within the framework of the investigation, the CC carried out procedural actions at the legal and physical addresses of the market participants, obtaining both electronic information from the work computers and mobile phones of the market participants’ representatives and oral explanations. After the procedural steps and the assessment of the information obtained, the CC additionally carried out an in-depth economic assessment in order to verify the factual relevance of the explanations received and to objectively assess the admissibility and legitimacy of such joint participation in the procurement.
In consultation with the Procurement Monitoring Bureau, the CC found that the participation of undertakings in a union of persons is considered admissible in order to fulfil the requirement of the procurement regulations that the tenderer must have experience in the sector. The CC’s investigation has shown that the company SIA CNC was not established as part of a complete reorganisation of AV and CSG and, therefore, could not participate in the procurement on an individual basis, as it could not benefit from the previous experience of AV and CSG. It follows that the companies AV, CSG and SIA Ēdiens.lv have acted lawfully in submitting their bids in association with CNC, with the aim of accumulating the experience of SIA CNC in order to be able to participate in future tenders individually and not in a union of persons.
In addition, the CC verified that AV and CSG have in fact transferred resources to SIA CNC and that it is now a well-established company that can start participating in procurement procedures for the provision of catering services on an individual basis if the procurement regulations allow it.
Acting Chairwoman of the CC Ieva Šmite: “The participation of competitors in procurement by forming a union of persons and pooling the resources available to undertakings is a permitted form of participation and is by no means new practice for market participants to participate in a procurement. However, I remind you that any undertaking considering joint participation in procurement must carefully assess whether the submission of joint bidding in any way distorts competition or restricts the choice of the contracting authority and whether the undertakings:
- Are not able to meet the requirements of the Regulations individually;
- Are able to objectively justify the need to join together to participate in the procurement;
- May each indicate their individual contribution to the performance of a particular potential procurement contract.”
Where market participants intending to participate or participating in joint procurements with other market participants have doubts regarding joint participation, the CC invites them to consult the guidelines on joint bidding in procurement and to carefully assess their ability to participate individually.