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Tender associations: a phenomenon raising competition concerns? - International Law Office

International Law Office

Competition & Antitrust - Croatia

Tender associations: a phenomenon raising competition concerns?

October 27 2011

Tender associations are associations of economic entities with the aim of providing a unified offer in public bids. According to the opinion of the Croatia Competition Agency (CCA), they trigger no antitrust concerns provided that they are not based on agreements or collusions which have the aim or effect of distorting competition.

In order to verify whether such a position is tenable, the CCA has analysed the practice of the European Commission and some other member states (eg, Poland, Czech Republic, Sweden, Hungary, France and Bulgaria). The CCA evaluated whether tender associations conform to existing EU theory and practice in the member states. The results are rather surprising, as the regulation of tender associations differs between member states.

In some member states, such as Denmark, tender associations are not prohibited but are relatively rare; while in others, such as Italy, Austria and Romania, they are allowed provided that it can be proven that the undertakings cannot also make an independent offer in public bids.

Such practice also reflects the reasoning of the European Commission, according to which tender associations, particularly in cases of small and medium-sized undertakings, may even have a pro-competitive effect on the market by allowing a higher number of bidders, some of which would not be able to place an offer under different circumstances.

Nevertheless, the double-sided character of such associations can be seen through the fact that at all examined levels, situations arose in which tender associations had a clear anti-competitive effect, resulting in the decrease of competition, limited number of small bidders and the geographic division of offers.

The lack of clarity in this area demonstrates the need for the CCA to carry out more research into the effect of tender associations and to recommend new regulations as necessary because the question of whether tender associations raise competition concerns remains unresolved.

For further information on this topic please contact Gabriele Wahl Cesarec at Petres & Cvirn by telephone (+385 1 4813 244), fax (+385 1 4813 073) or email (g.wahlcesarec@pc-lawfirm.com).

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