On 15 April 2014, the Commission for Protection of Competition organized its annual “Competition day” seminar, this year dedicated to competition law infringements in the context of public procurement procedures.
Professor Boris Begović noted that competition can be harmed not only by breaching the law, but also by practices which are in compliance with the law. He emphasized in this respect bilateral treaties between Serbia and other countries for financing of projects in Serbia, which condition the loan by the requirement that the works be performed by companies from the creditor country. Such arrangements are outside the realm of the Public Procurement Law and, according to Prof. Begović, do not allow for market test of the prices paid for the works.
Three key instances of abuse are identified in the area of public procurement: (i) technical specifications, (ii) additional qualification requirements and (iii) criteria for award of public procurement contract. They are all apt to be misused to favor pre-selected bidders.
Possible defense strategies that could be used by the bidders involve submitting questions to the contracting authority for clarification of technical and/or additional requirements and, more importantly, lodging requests for protection of rights to the Commission for Protection of Rights in Public Procurement Proceedings (CPR). Such request has suspensory effect on the procurement process for as long as the CPR does not render its decision pursuant to the request. Saša Varinac, the President of the CPR, highlighted that there has been a 39% increase in the number of requests for protection of rights in the period between April 2013 and December 2013. The rate of success of the requests for protection of rights has been close to 70%.
He also spoke about new competences of CPR, vested upon this authority by the new 2012 Public Procurement Law. These include the power to conduct misdemeanor proceedings in the first instance, the right to monitor and control the implementation of CPR’s decisions, the right to impose monetary fines on contracting authorities and the right to annul public procurement contracts. All decisions of the CPR are published online, which is said to contribute to the transparency of the proceedings. The CPR has recently begun to publish its legal opinions, which are binding upon it. This should increase legal certainty.
Two forms of restrictive agreements have been noted in the context of public procurement: (i) collusion between the contracting authority and the bidder with respect to the bidding requirements (procedure rigging) and (ii) collusion between bidders (bid rigging). Competitive harm that arises in these situations is in the form of increased prices and market allocation. In this context, it should be noted that the Serbian Commission for Protection of Competition is of the view that horizontal agreements to submit a joint bid are inherently restrictive of competition and should be always notified to the Commission for Protection of Competition for individual exemption.
The discussion also touched upon competition law enforcement. It was noted that the Commission for Protection of Competition lacks resources, especially personnel, to more actively pursue competition law infringements, while the Administrative Court in charge of judicial review of the Commission’s decisions is not sufficiently specialized to deal with complex competition law issues. The Serbian Criminal Code criminalizes the abuse of “monopolistic” or dominant position on the market. The crime exists if abuse of dominant position (the concept of monopoly is not regulated by law) has caused disruption on the market or has brought the infringer into a more favourable position compared to other market undertaking by yielding a material gain to the infringer or another entity or causing damage to other undertakings or consumers. Andrej Plahutnik, the head of the EU project – Strengthening competition in Serbia, suggested that this criminal act, which has so far remained a paper tiger, should be prosecuted actively in order to raise competition law awareness and deter potential infringers.
