The fight against bid-rigging (i.e. collusion in public tenders) has become a major enforcement priority for national competition authorities. Companies in the life sciences sector are increasingly targeted by bid-rigging investigations. This development is promoted by the OECD, ICN and UNCTAD, which have done much work to sensitize competition and procurement officials about the harm caused by bid-rigging. In February 2013, a WTO working paper warned that “bid rigging can raise the price paid by governments for goods and services in the order of 20-30%”. In a similar vein, the OECD emphasizes the need to contain public spending on healthcare, which has risen by over 70% per capita since the early 1990s and absorbed on average over 9% of GDP in 2010. In this context, national authorities consider competition enforcement against bid-rigging as a tool to achieve value for money in healthcare public tenders.
Examples of national cases in 2008-2012
|Products||Member State||Total Fines (EUR)||Key Issues|
|Automated medicine dispensers||Portugal||400,000||Retail price fixing. A wholesaler and retailer were fined for entering into a vertical agreement that set the resale prices, while both companies submitted competing bids in public tenders.|
|Magnetic resonance machines||Italy||5,500,000||Market sharing. Manufacturers of medical equipment were fined for colluding to coordinate their participation in public tenders and allocate quota shares.|
|Medical supplies||Lithuania||N/A||Retail price fixing. Producers/suppliers and wholesalers of medical products were required to terminate clauses in vertical agreements which had imposed obligations on the wholesalers to inform the producers/suppliers about upcoming tenders and to negotiate conditions/prices of supplies for resale in the tenders.|
|Blood glucose monitoring reagents||Portugal||13,400,000||Information exchange. Pharmaceutical companies were fined for exchanging price sensitive information that enabled them to align their bids in tenders.|
|Implantable heart defibrillators||France||2,600,000||Collective boycott. Manufacturers of implantable heart defibrillators were fined for colluding to decline an invitation to a joint call to tender organized by 16 public hospitals. The Paris Court of Appeal rejected the manufacturers’ explanation that they independently abstained from submitting bids due to their concerns about the legality of the joint call to tender and uncertainty about the profitability of the contract. The Court held the companies failed to rebut the presumption that their discussions about the tender during trade association meetings were not used as an excuse to reveal to each other their intentions to decline the invitation to tender.|
|Ostomy products||Italy||1,600,000||Collective boycott. Four major suppliers of ostomy products – representing 95% of the market – were fined for colluding to decline an invitation to a tender organized by the Ferrara health authority.|
|Insulin products||Romania||22,700,000||Market sharing. A manufacturer of insulin products and three of its distributors were fined for allocating a portfolio of diabetes products among the three distributors, such that they did not compete against each other in public tenders.|
|Dialysis equipment||Romania||1,500,000||Cover bidding. Distributors of dialysis equipment were fined for colluding to submit incomplete bids, such that the designated winner was awarded the contract.|
 See OECD, “Roundtable on Collusion and Corruption in Public Procurement”, Directorate for Financial and Enterprise Affairs, Competition Committee, DAF/COMP/GF (2010)6, p. 249-252, 326, 351, 354, 384-385 and 412.
 See WTO, “Competition Policy and Poverty Reduction: A Holistic Approach”, Staff Working Paper ErSD-2013-02, p. 12
 See Organisation for Economic Co-operation and Development, “Health care systems: Getting more value for money”, OECD Economics Department Policy Notes, No. 2., p. 3.
 The Competition Authority closed the investigation after commitments from the undertakings to terminate the disputed clauses which were suspected of having the purpose of fixing the wholesalers’ bid prices.