The Court of Justice of the EU clarifies the duration of an infringement in case of collusion in a public tender

EU
Available languages: FR

In its preliminary ruling of 14 January 2021, the Court of Justice of the EU clarified the duration of an infringement in the event of collusion in a public tender. Determining the end date of the infringement is essential since this date marks the start of the limitation period during which a penalty for that infringement may be imposed. The duration of the infringement is also an important factor in determining the amount of the fine. 

In April 2007, Fingrid Oyj, the company which owns and develops the high-voltage electricity transmission network in Finland, published a call for tenders for the construction of a high-voltage transmission line. In June 2007, Eltel won the contract.

Following a leniency application submitted by Empower Oy, the Finnish Competition and Consumer Authority (FCCA), in a decision of 31 October 2014, imposed a fine of EUR 35,000,000 jointly and severally on Eltel Group and Eltel Networks for infringement of Paragraph 4 of the Law on restriction of competition as well as Article 101.1 of the Treaty on the Functioning of the European Union (TFEU), for submitting coordinated bids with Empower Oy regarding prices, margins and market share for the design and construction of electricity transmission lines in Finland.

The FCCA considered the infringement to be a single and continuous infringement that started no later than October 2004 and continued uninterrupted until at least March 2011.

However, the Finnish Market Court dismissed the application for the fine on the grounds that the case, filed in 2014, was time-barred. According to the Market Court, Eltel had stopped participating in the infringement in January 2010, when the construction works were completed.

The Supreme Administrative Court, following an appeal brought by the FCCA, referred a question to the Court of Justice of the EU (CJEU) for a preliminary ruling to clarify the duration and end date of an infringement of Article 101.1 TFEU.

In its preliminary question, the Supreme Administrative Court considered four dates that could mark the end of the infringement:

  • The date of submission of the tender.

  • The date of conclusion of the contract.

  • The date of payment of the last instalment of the agreed price.

  • The date of the construction works’ completion.

The CJEU ruling

Firstly, the CJEU notes that Article 101.1 TFEU precludes any direct or indirect contact between economic operators if it either influences the conduct on the market of an actual or potential competitor or reveals to such a competitor the conduct the other party will follow or adopt on the market, where the aim or outcome of such contact is to restrict competition.

Furthermore, the CJEU emphasises that agreements to share customers, such as price agreements, represent the most serious restriction of competition.

In this case, the CJEU considered that the evidence against Eltel was sufficient to constitute a restriction of competition prohibited by Article 101.1 TFEU.

As regards the duration of the infringement, the CJEU states that, in the case of a cartel that no longer exists, it is sufficient, for Article 101.1 TFEU to apply, that it continues to have an effect beyond the date on which it comes formally to an end. Therefore, the duration of the infringement could, in principle, last for the entire period during which the collusive prices apply (i.e. until the last payment by the contracting authority), even though the cartel had formally ceased to be in force.

However, the CJEU recalls that the objective behind the competition rules requires that an infringement of Article 101.1 TFEU must last for as long as the restriction of competition resulting from the conduct concerned persists.

In this case, the CJEU notes that the infringement covers the entire period during which Eltel implemented the disputed agreement, including the period during which the fixed-price offer that Eltel submitted was in force or was likely to be incorporated in a binding contract between Eltel and the contracting authority.

According to the CJEU, the restrictive effects on competition end, in principle, once the essential provisions of the contract, in particular the total price paid for the goods, works or services under the contract, have been finally determined, where appropriate, when the contract has been concluded.

In conclusion, the CJEU held that the infringement ends on the date of submission of the unlawful tender or, if the tender is successful, on the date on which the contract between the undertaking and the contracting authority is signed, provided that the contracting authority has finally determined the essential provisions of that contract and, in particular, the total price to be paid for those works.

It should be noted that many national competition authorities highlight collusion in public procurement as a serious infringement of competition law. Thus, several national authorities regularly condemn this type of infringement, notably in France, Spain and Hungary. In 2017, the Belgian Competition Authority published a guide for purchasers in charge of public procurement and welcomes any request for investigating public tender collusion.