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Procurement organizers negligence facilitated bid-rigging by three amelioration sector companies



On 13 September the Competition Council of Latvia (the CC) adopted a decision finding three amelioration companies – SIA “LIMBAŽU MELIO”, SIA “Bauskas meliorācija” and SIA “Meliorācijas eksperts” – liable for bid-rigging in tenders financed partly from European structural and investment funds. The infringement resulted in all companies receiving a total of 70 000 euros in fines.

According to the Rural Development Programme 2014 – 2020, approved by the European Commission, agricultural farms and other companies in Latvia are eligible to receive funding of the European Agricultural Fund for Rural Development (EAFRD) for development of agricultural and forestry infrastructure. The potential recipients of such support – usually farms – have to develop a project and ensure its implementation in several stages, including designing amelioration systems project, topographic surveying, construction and construction supervision. Each stage is tendered to ensure the best competitive price. Farms are allowed to employ project managers, who perform on their behalf all activities related to organisation of tenders, signing and submission of documents. Whereas allocation of EAFRD funding for projects is administered and supervised by Rural Support Service (RSS).

The CC initiated an investigation based on information received from RSS. Throughout the course of the investigation, the CC assed information submitted by RSS and obtained during dawn raids which were carried out on premises of 11 companies in total. As a result, the CC concluded that three amelioration system construction companies – SIA “LIMBAŽU MELIO”, SIA “Bauskas meliorācija” and SIA “Meliorācijas eksperts” – had colluded in four tenders, electronically exchanging information of estimated prices and agreeing on the winner of each tender.

SIA “Bauskas meliorācija” and SIA “LIMBAŽU MELIO” colluded in three construction works tenders by also agreeing on SIA “LIMBAŽU MELIO” as designated winner, whereas SIA “Meliorācijas eksperts” and SIA “Bauskas meliorācija” colluded in one construction works tender by agreeing on SIA “Meliorācijas eksperts” as designated winner. For these infringements the CC imposed a fine of 15 702 euros on SIA “LIMBAŽU MELIO”, 26 399 euros on SIA “Meliorācijas eksperts” and 28 376 euros on SIA “Bauskas meliorācija”.  

The information obtained during the investigation also shows that actions of tender organizers and supervisors were partly at fault for anti-competitive behaviour of companies. In many occasions the negligence of project managers to whom the farms entrusted the implementation of projects resulted in tenders based on superficially prepared and often non-signed documents submitted by one competitor in name of another. At the same time this information was not used to exempted companies from their liability for the committed infringement.

These findings again confirm that prohibited agreements are frequently facilitated by activities implemented by procurement organizers themselves. The CC holds a view that amount of prohibited agreements will not decrease as long as procurement organizers will continue to disregard the responsibly to effectively administrate public resources. Therefore, the CC is planning to reach out to responsible authorities, reminding the purpose and importance of true competition in tenders.