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Competition Law

Analysis - debate - current awareness

27 MAY 2014

You're barred

John Cassels


You're barred

The list of potential consequences for companies found to have infringed EU (and/or Member States' national) antitrust rules includes:

  • very substantial corporate fines
  • damage to business reputation
  • material and long term reduction in share price (for listed companies)
  • unenforceable contracts
  • management diverted from business development
  • personal executive sanctions (fines, director disqualification and imprisonment)

For companies that wish to be (or are) suppliers of goods or services to government, infringing the rules also raises the prospect of exclusion from public tenders and contracts. Under the EU's public procurement rules, 'contracting authorities' (which include central and local government and other public bodies) have discretion to exclude from contracts companies which have been found guilty of 'grave professional misconduct'.

In the UK, a recent investigation found 103 construction companies (many of them small and medium sized businesses) guilty of bid rigging and cover pricing. In fact, the Office of Fair Trading found evidence of cover pricing in more than 4000 projects involving over 1000 companies, but as a matter of priority, had focused its investigation on those instances where the evidence was strongest. Following the investigation, many contracting authorities decided to exclude those businesses that had been found guilty from participating in tenders, effectively killing off those businesses.

As a result, the Office of Fair Trading issued a guidance note recommending that parties found guilty should not be excluded from future tenders or be subject to similar measures since it would have been wrong automatically to assume that companies not named in the infringement decision had not been involved in bid rigging.

If you are interested in these issues, please do not hesitate to contact me.

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