As of 1 October 2023, it is now an offence to interfere with a tender, regardless of whether it is 'public' or 'private'. 

In addition, interfering with an auction also now attracts criminal liability, as does interfering with any type of public procurement procedure – whether competitive or non-competitive. At the same time, the penalties involved have been made stiffer.

Important context - implementation of the ECN+ Directive

These changes should be understood in the context of the implementation of the ECN+ Directive, which is expected to increase the number of collusive tenders that will be subject to antitrust proceedings by the President of the Office of Competition and Consumer Protection ("the UOKiK").

Collusive tendering is the only practice restricting competition that may give rise to criminal liability. Yet, reports by the UOKiK indicate that, to date, there have been very few proceedings ending in decisions finding collusive tendering – just five in 2021 and six in 2020.

This was most likely because those participating in tenders were afraid to submit leniency applications to the UOKiK - leniency allowed entrepreneurs to avoid a fine from the UOKiK, but did not exclude criminal liability.

The law implementing the ECN+ Directive, which entered into force on 20 May 2023, addresses this problem by adding § 6 in Article 305 of the Criminal Code ("CC"), in which a perpetrator of an offence (collusive bidding) is not subject to punishment if:

• it has notified the existence of a bid rigging arrangement to a law enforcement or competition authority of an EU Member State or to the Commission; and
• it disclosed all the relevant circumstances of the offence before the prosecuting authority became aware of them,

In light of the above, it is very interesting to compare the changes resulting from the implementation of the ECN+ Directive with the subsequent amendment of the CC presented below.

What and when?

On 1 October 2023, provisions amending Art. 305 of the CC (the "Amendment") entered into force. 

The aim of the Amendment was to 'modernise' and adapt the law to current market realities, and the legislator made many changes that significantly expand the application of Art. 305.

The most important of those changes:

• As of 1 October, it is a criminal offence to interfere with a 'tender' – not only one organised under the Public Procurement Law ('PPL'), but also with other procedures that the PPL mentions, whether competitive or non-competitive, such as sole-source contracts and negotiations without an announcement.
• The requirement of the public nature of the tender has been removed - thus, the provision also extends protection to private tenders, including those conducted on the basis of the provisions of the Civil Code.
• The legislator has also distinguished a variant of a prohibited act concerning auctions. This means that Art. 305 also protects auctions conducted under the provisions of the Civil Code.
• The Amendment expressly prohibits acts such as entering into an agreement, communicating or disseminating information, or remaining silent about material circumstances (terms defined in the instrument) concerning a tender/auction/public procurement procedure when it is being prepared. Prior to the amendment, the popular view was that the above acts only applied to tenders that had already commenced.
• The legislator introduced the concept of "public interest" as one of the objects of protection of Art. 305 CC. Prior to the Amendment, acts committed to the detriment of the owner of a property, person or institution were criminal offences, whereas now acts committed to the detriment of the 'public interest' are also criminal offences.
• Previously, the maximum penalty for entering into an agreement, communicating or disseminating information or keeping silent about material circumstances was three years; now it is five years.
• The Amendment introduces the principle that, when a perpetrator commits an offence under Art. 305 CC for financial or personal gain, he or she may face a longer sentence – of up to eight years. 

What is the significance of these changes?

Prior to the Amendment, there was a doctrinal dispute as to whether the term "public tender" should be understood as a tender organised by a public entity, or as a tender addressed to an unlimited number of participants, also organised pursuant to the Civil Code.

Because the first view was the prevailing view, Art. 305 dealt with only a very narrow range of contractual forms.

The Amendment, however, acknowledges both views by extending criminal liability to include acts committed in connection with an auction and those committed in connection with all procedures contained in the PPL.

Furthermore, the Amendment has nothing to say about the value of a tender/auction/public procurement procedure, which means that even participants in an auction or tender of negligible value may be subject to a criminal sanction. 

Who is at risk of punishment? 

Criminal liability may be incurred by any natural person who commits, attempts, persuades or gives an order to disrupt a tender/auction/public procurement procedure. This may be the chairman of the board of directors of the company, an employee of the company, or an employee of the institution organising the tender/auction/public procurement procedure.

A legal entity may also be liable under the Act on Liability of Collective Entities for Criminal Offences (penalty of up to PLN 5,000,000).

What action should be taken? 

Irregularities that could lead to the sanctions contained in Art. 305 CC may be committed not only - as before - by employees dealing with public procurements, but also by those involved in private procurements (auctions or tenders), whether in sales or purchasing. The extension of the material scope of criminal liability to private tenders means that persons acting on behalf of a contracting party not covered by the PPL can also be considered perpetrators of such offences.

As a result of the Amendment in connection with the previously introduced changes regarding leniency applications, in the next few years we may see many more proceedings conducted by the UOKiK concerning tender collusion, and more criminal cases pursued by law enforcement agencies.

Internal compliance policies, then, should correspond to the risks associated with the new wording of Art. 305 CC.

For more information, please contact Stanislaw Szymanek and Marcin Alberski 

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