Modernisation of Public Procurement - Making the public market more competitive and collusion proof?

University essay from Lunds universitet/Institutionen för handelsrätt

Abstract: This thesis has its focus on the interaction between competition law and the public procurement regime. Since the two systems have the same objective of the creation of an internal market it is vital that the two systems reach coherence. Despite this there is now express provision on the importance to fight anti competitive behaviour in the Public Sector Directive 2004/18/EC. On March 28th 2014 the new Public Sector Directive 2014/24/EU were published in the OJ. Prior to the modernised and new Directive the Green Paper emphasized that it is vital to avoid distortion of competition and generate the strongest possible competition on the public procurement market. The purpose with the thesis is therefore to analyse the new Public Sector Directive 2014/24/EU in order to see how the changes can create effective competition on the public market and how they can affect the tenderers’ possibility to create and sustain collusive agreements, which is prohibited under Article 101 TFEU. Competition is of essence in a system of tendering and when the tenderers engage in anti competitive behaviour it undermines the contracting authorities’ possibility to reach best value for money. The public procurement market is a risk zone for collusive agreements (bid rigging) due to various reasons. The risk factors relates to both the market structure and the public procurement process. One of the most important risk factors is that transparency permeates the entire process. Because of this bid rigging on the public market tends to be very stable and due to this the leniency programmes does not reach its full potential on the public procurement market. Therefore the contracting authorities have a decisive role in the prevention and detection of bid rigging. OECD has published guidelines on how such prevention and detection can be done. However, it is questioned whether such guidance is enough or whether there is a need of legislative instruments. Despite the importance of fighting anti competitive behaviour there is not a lot of the legislative changes in the new Directive that has as its primary purpose to prevent this kind of behaviour. However, the changes are capable of creating a more accessible market for SMEs and the barriers to entry can be lowered. This will result in more participation and the creation of effective competition, which in turn has the effect of decreasing the tenderers’ possibility to create and sustain collusive agreements. A few of the changes are minimum requirements and others are discretionary, therefore the outcome and creation of effective competition will be dependent on how the Directive is implemented in the different Member States. One of the conclusions to be drawn is that the legislator could have gone much further in its efforts to create a more pro competitive Directive on public procurement.

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