Introduction

In a recent interview, the Prosecutor General of the Belgian Competition Authority (BCA) hinted at the authority’s future priorities. It comes as no surprise that the authority is keeping a keen eye on the healthcare, telecoms and agri-food sectors, as these have been regular guests on the BCA’s priorities lists over the years.

His remarks on new enforcement tools are however noteworthy. He mentioned that the BCA and other EU competition authorities are developing innovative IT tools designed to combat bid rigging in public markets. The tools aim to scrutinise public procurement databases to identify contracts that deviate from the standard, thereby unveiling suspicious bids. Furthermore, the BCA has plans to initiate a series of sector inquiries, a tool that it has not frequently employed in the past.

In this article, we will delve a bit deeper into these topics. After exploring the rights of companies in the context of sector inquiries, we will briefly discuss what impact a competition law infringement could have on a company’s participation in public procurement proceedings.

Sector inquiries

The framework for sector inquiries allows the BCA to investigate entire sectors of the economy, particularly when there are suspicions that the market may not be functioning optimally due, in part or in whole, to violations of competition rules. The conclusions drawn from these inquiries could prompt the authority to open specific investigations against individual companies.

In Belgium, the Economic Law Code (ECL) empowers the BCA’s Managing Committee to authorise the president to initiate a general or sectorial inquiry in response to “indications of market distortions”.[1] The notion of “indications of market distortions” is not clearly defined, but it can be understood in line with EU rules. Under these rules, the Commission can open a sector inquiry “where the trend of trade between Member States, the rigidity of prices or other circumstances suggest that competition may be restricted or distorted.”[2]

The BCA’s competences in such inquiries mirror those in investigations.[3] As such, the authority can request companies to provide information and respond to questionnaires. The authority’s first request is without obligation to respond. However, it can follow up with a formal decision, which requires companies to respond. Failure to respond or a response containing incomplete, incorrect or misleading information may lead to fines.[4] The BCA’s requests for information must however always be proportionate to their objective and cannot compel an undertaking to admit to any violation of competition law. Contrary to the European Commission, the BCA also cannot conduct unannounced dawn raids in the framework of a sector inquiry. 

The results of sector inquiries can vary significantly. They could lead to formal competition law investigations targeting individual companies. They could also result in recommendations to change government policies and regulations, or suggest changes to industry standards. Alternatively, sector inquiries may determine that no changes are needed. For example, following a sector inquiry into e-commerce in 2015-2017, the European Commission initiated formal investigations and subsequently launched three investigations into certain practices of consumer electronics manufacturers, agreements between videogame distributors and publishers, and between tour operators and a hotel chain.[5]

While the BCA has not yet conducted a formal sector investigation, the Prosecutor General’s statements reflect a shift towards proactive intervention designed to address potential distortions within specific economic sectors. In line with this new approach, the BCA has recently examined the financial sector. Following a request from Deputy Prime Minister and Minister of Economy and Labour, the BCA issued an informal advisory report on retail banking services. This report scrutinised potential competition issues within the sector, particularly regarding the low interest rates offered on savings accounts, despite the European Central Bank ("ECB") raising the base rate. Interestingly, this report was not an official sector inquiry, meaning the authority was unable to use the full ambit of its investigatory powers as set out earlier.

Competition law enforcement in public procurement

It is not the first time that the BCA attempts to increase detection of collusion in public procurement. In January 2017, it published a guide (in French and Dutch) aimed at helping contracting authorities prevent and detect bid rigging. This turned out to be no unnecessary effort either, as a decision of 2 May 2017 found that the tendering authority had facilitated the cartel by making the market highly transparent and by exchanging commercially sensitive information between tendering parties.

By developing their own IT tools, competition authorities seem to take matters into their own hands. Where previous tools were predominantly aimed at helping other authorities to identify and flag collusive behaviour, the Auditor General’s statements seem to suggest that the authority will play a greater role itself in the detection.

Although details on the tools mentioned by the Auditor General are not publicly known at this stage, other competition authorities have previously engaged in similar projects. For example, the French Competition Authority initiated a project to detect cartels in public procurement by using data science techniques, combining public procurement data with other public sources,[6] and creating indicators identifying anomalies. Those anomalies are subsequently investigated by the authority to confirm whether or not an anticompetitive agreement can be detected.[7]

Although the operational efficacy of these IT tools remains to be seen, the impact of a systematic screening of public procurement and the subsequent implications for market participants cannot be understated.

Impact of cartel decisions on participation in public procurement procedures

These new tools could lead to more incisive enforcement on public procurement procedures. The significance of this should not be understated as the consequences of cartel decisions on a company's involvement in public procurement procedures can be considerable. Contracting authorities may exclude companies suspected of participating in anti-competitive agreements with other businesses. Such exclusions remain valid for a period of three years following the termination of the infringement.[8] 

Notably, the context is immaterial. Even if the collusive agreements are not directly linked to public procurement, they can still result in exclusion as infringements of competition law could cast doubts over a company's integrity. The exclusion may also encompass entities that control the infringing company, such as a parent company holding a majority stake, depending on the specific tender documents.

However, exclusion is not automatic; it hinges on the discretion of the authority. The authority must also possess a reasonable basis for such a decision, supported by credible evidence.

Companies can moreover take steps to mitigate the risk of exclusion:

• Self-Declaration: Companies that have previously committed a competition law infringement could benefit from proactively disclosing this to the contracting authority. Conversely, failure to do so may result in exclusion.
• Remediation Measures: Demonstrating efforts to rectify past misconduct can improve a company's position. This could encompass compensating for damages, cooperating with investigations, and introducing measures to avert future infringements. Participation in competition authorities’ leniency programs signifies cooperation but is insufficient in isolation. Companies must also display a real commitment to preventing future infringements.

European Institutions: Different Rules Apply

The rules outlined above are applicable to public procurements by Belgian authorities. European institutions, including those located in Brussels, adhere to a distinct set of rules.[9] Key differences include:

• Proof of Infringement: EU institutions typically require a final court decision or final decision from a competent administrative authority before exclusion, with some exceptions[10].
• Exclusion Duration: The exclusion period is similar for both Belgian and EU procurements (around 3 years) but with slight variations in calculation.
• Binding Decisions: Decisions by Belgian authorities are not binding on other authorities. Conversely, exclusions by EU institutions are generally binding on all other EU institutions.

Key takeaways

• Seek Guidance for Sector Inquiries: When faced with a request for information during a sector inquiry, it is advisable to seek professional counsel to ensure your interests are duly protected. Although the BCA does not investigate individual companies during a sector inquiry, past experiences indicate that such individual investigations, which may end with fines, are often the subsequent step.
• Consider Regular Compliance Screenings: Traditionally, leniency programs have been the most significant source of information for competition authorities. However, authorities are increasingly diversifying their enforcement toolkit, using anonymous whistleblower tools and IT tools such as those discussed in this article. This diversification is likely to heighten the chances of infringements being detected before companies have the opportunity to apply for leniency. To counter this, companies are recommended to conduct regular compliance screenings and identify infringements at an early stage.
• Remediation measures: In the unfortunate event of an infringement, it is recommended to devise a comprehensive remediation plan to restore the company to the best possible position as it was prior to the infringement.

For more information or further guidance in this area, please contact Baptist Vleeshouwers, Kevin Munungu Lungungu and Claire De Neve.

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[1] Article IV.47 ECL.

[2] Article 17 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2003] OJ L1/1.

[3] Article IV.47 read in conjunction with Articles IV.40, IV.40/1 and IV.41 ECL.

[4] Article IV.82, §1, 1° and 2° ECL.

[5] Antitrust: Commission opens three investigations into suspected anticompetitive practices in e-commerce, 2 February 2017, available at: https://ec.europa.eu/commission/presscorner/detail/en/IP_17_201. 

[6] Notably, the French Competition Authority combined the essential public procurement data (DECP) and the Bulletin Officiel des Annonces des Marchés Publics (BOAMP - Official Bulletin of Publication of Public Procurement Notices) with the National Trade and Companies Register (RNCS).

[7] OECD, Working Party No. 3 on Co-operation and Enforcement Data Screening Tools for Competition Investigations–Note by France, https://one.oecd.org/document/DAF/COMP/WP3/WD(2022)30/en/pdf. 

[8] Article 57(4) of Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC [2014] OJ L 94/65; Article 69, first paragraph, 4°, of the Law of 17 June 2016 on public procurement, BS 14 July 2016.

[9] These are outlined in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 [2018 OJ L 193/1.

[10] An exclusion may indeed also be based on a “preliminary classification in law of a conduct by an ad hoc panel which is composed by a standing high-level independent chair appointed by the Commission, two permanent representatives of the Commission; and one representative of the contracting authority.