The Competition Council (the CC) has educated two construction companies – Ltd. “AK Technology” and Ltd. “GATE L” – on the negative consequences of infringements of the Competition Law, including cartels or participation in cartels. Furthermore, the CC advised and negotiated with the mentioned companies based on the information provided by capital company “Latvenergo” on the possible coordination of the companies' activities in the procurement procedure organized by it. Following the warning, companies are committed to avoid similar acts in the future.
The CC received information from capital company “Latvenergo” about a possible violation of Competition Law in the activities of Ltd. “AK Technology” and Ltd. “GATE L” by participating in the candidate selection process for the procurement procedure related to the replacement and additional installation of Riga Hydroelectric Power Plant compressors. Upon receipt of the applications submitted to the candidate selection procedure, the contracting authority suspected that the two market participants had coordinated their activities, as several overlaps and similarities were found in the companies' applications, for example, application forms were filled in the same and comparable style, as well as the competitor's bid contained documents addressed to the other competitor. Thus, the CC first seems to conclude that the bids of two independent market participants were not prepared independently but were mutually coordinated, not observing the principles of fair competition.
Juris Gaiķis, the Chairman of the CC: “Cartels or agreements between competitors in procurements are the most serious and, unfortunately, still the most common violation of Competition Law in Latvia. To alleviate this disease, the actions of procurers in the face of suspicious coincidences, which may indicate a possible violation, are especially important. The most important thing is to report such cases to the Competition Council, as the customer capital company “Latvenergo” did in this case. In this way, the Competition Council can assess the circumstances and, if necessary, educate companies so that they will not make similar mistakes in the future.”
Considering the nature of the alleged violation, as well as the circumstances that the companies have never before participated in joint procurement, that the violation has not been repeated and that the bidders' bids did not contain commercially sensitive information such as financial bid estimates, in the opinion of the CC, the most effective way to prevent the recurrence of such infringements in the future is a preventive warning. During the negotiations, the essence of the prohibition of agreements specified in the Competition Law was explained to companies, at the same time informing about possible legal consequences that may occur if signs of a prohibited agreement are established in the activities of the market participants.
Alternative infringement prevention methods without formal initiation of proceedings in the institution have been used since 2015, when the CC introduced a procedure for prioritizing cases, concentrating its limited resources on the most significant violations with a greater impact on a particular market. Formal infringement cases can take up to two years, so alternative methods allow a potential infringement to be remedied more quickly, saving resources for all parties involved. The aim of prevention is to educate companies, reduce possible agreements between market participants in the future, reduce the risk of concerted practices and prevent the recurrence of similar cases.
In 2021, the CC has been an active proponent of prevention, it has carried out seven prevention procedures, warning a total of 19 legal entities.
Issuing a warning to market participants in the framework of prevention does not have legal consequences for the further participation of these companies in public procurement. However, the CC retains information on the warnings issued, and if the alerted company comes back to the CC in the future due to possible violations, a formal infringement case is initiated.