The negative side of transparency. : Some significant anti-competitive outcomes of the excessive disclosure of information in the EU public procurement market

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International and European Law

European Competition Law and Regulation

Master Thesis

The negative side of transparency.

Some significant anti-competitive outcomes of the excessive disclosure of

information in the EU public procurement market.

by

Vittoria Bonaldo

Supervisor/Examiner:

Examiner:

Dr. Prof. Daniela Obradovic

Dr. Prof. Ronald van Ooik

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Transparency has always been intended as a positive instrument that greatly contributes to the achievement of essential goals such as integrity, effectiveness and equal treatment. In the context of EU public procurement, in particular, its application has been strengthened for the purpose of fighting corruption and simplifying the awarding process. However, there is a downside to this.

This research looks at the negative aspect of the principle of transparency as a result of the excessive amount of information that is to be disclosed in the context of procurement procedures.

If, on the one hand, the Directive 2014/24/EU on public procurement has expressly codified the principle of undistorted competition as one of the fundamental rules governing the system concerned, on the other hand, it has introduced a number of specific and concrete transparency requirements that act as “facilitating practices”.

This study, therefore, analyses some of the most significant anti-competitive outcomes that may result from the unbalanced application of transparency in the EU public procurement market and concludes by proposing a few specific suggestions to mitigate the issue.

Part 1 Introduction

One of the essential goals of the EU public procurement regime is to ensure that public funds are efficiently employed.

This purpose can be achieved only through the application of the principle of transparency1, which is a fundamental tool aimed to fight corruption and discriminatory practices as well as to contribute to the realization of the conditions of open competition in the public procurement marketplace.

However, there is a downside to this. Although transparency is indispensable for the purpose of ensuring the effectiveness of the public procurement system, it may also pose considerable problems. The most critical issues arising from the application of the principle at stake in the field of public procurement concern the EU competition rules.

The disclosure of an excessive amount of information in a public award procedure, indeed, may facilitate a number of anti-competitive conducts on the part of the bidders and the authorities involved in the process. In other words, the practice in question can lead to the cartelization of the market and to the misuse of business information.

Ranging from the tacit collusion between bidders through the conclusion of proper agreements in order not to genuinely compete for tenders to the unlawful revelation and the misappropriation of trade secrets, the negative consequences of the misapplication of transparency can seriously threaten the competitive structure of the public procurement market.

This potential negative side has been overlooked both by the EU courts and the legislator for a long time and it does not even seem to be properly addressed by the recently adopted EU public procurement package, which sets out the EU legal framework for general procurement, utilities

1 _{According to Case C-329/8, Telaustria Verlags GmbH and Telefonadress GmbH v Telekom Austria AG [2000]} ECLI:EU:C:2000:669, para 62, the obligation of transparency "…consists in ensuring, for the benefit of any potential

tenderer, a degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of the procedures to be reviewed".

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procurement and the award of concession contracts2_{. In particular, the current EU Directive on public}

procurement3 has introduced a set of concrete and strict transparency requirements that has led to open up the access to a large number of information about the procurement process, thus facilitating the communication and the exchange of information among bidders.

Despite the explicit codification of effective competition as one of the general principle regulating the EU public procurement, in fact, the high degree of transparency required by the current EU Directive appear to seriously undermine the competitive dynamics of the public procurement market. Consequently, given the recognized relevance of fair competition in the context of public procurement, questions arise in relation to the potential unfair results of the excessive application of transparency in public procurement and the related possible measures that should be undertaken in order to avoid or, at least, reduce the distortion of competition.

Both scholars and the case law of the European Courts have repeatedly addressed the issue, seeking to strike a balance of transparency with the principle of undistorted competition in the public procurement market.

The analyses of the more significant aspects of the relationship between two of the most essential values of the public procurement regime will be also the main object of the present research, which will specifically focus on the assessment of some of the possible anti-competitive consequences that the undue application of transparency can cause.

In particular, the distortive impact of transparency on competition in the area of public procurement will be analysed through the discussion of one main hypothesis and three sub-hypotheses.

The leading case will concern the general assessment of the ‘negative side’ of transparency, namely its capacity, if implemented in an excessive way, to favour the occurrence of practices that can seriously affect competition in the public procurement market.

Given the existence of a number of different types of anti-competitive practice originating from the clash between transparency and competition, which vary depending on their heterogeneous distortive capacity, not all of them are equally serious.

Therefore, the first type of restriction presented will be tacit collusion among tenderers, whose effect is to enable competing undertakings to use information about each other in order to coordinate their strategies.

However, an even more severe threat to fair competition is posed by bid rigging. This second sub- hypothesis constitutes, in fact, a well-known type of hard core cartel resulting from the conclusion of a proper unlawful agreement among bidders in order not to compete for a public tender. The practice in question may deeply harm the competitive structure of the market concerned.

Finally, the third case will deal with the unduly disclosure of commercial and sensitive information after the end of the awarding procedures and the negative impact of its unfair use on competition among companies acting in the public procurement market.

In order to proceed with the assessment of the subject-matter, therefore, the study will be undertaken on the basis of normative analysis of the EU rules governing the application of the principle of transparency in the area of public procurement as well as on an empirical analysis concerning the actual effects of transparency on competition in the public procurement market.

2 _{Directive 2014/25/EU of the European Parliament and of the Council of the 26 February 2014 on procurement by entities} operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC [2014] OJ L94/243; Directive 2014/23/EU of the European Parliament and the Council of the 26 February 2014 on the award of concession contracts [2014] OJ L94/1.

3 _{Directive 2014/24/EU of the European Parliament and of the Council of the 26 February 2014 on public procurement} and repealing Directive 2004/18/EC [2014] OJ L94/65.

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5 In particular, the research will be focused on the EU legislation that regulates the public procurement sector and the disclosure and use of business information; the significant case law on the topic; EU studies and reports carried out by groups of experts; documents of the European Commission and of the OECD.

Moreover, in order to allow the reader to achieve a full knowledge of the topic, the thesis will examine also the results of the economic analyses available in secondary literature.

Therefore, the thesis will first analyses the nature and the application of transparency in the context of public procurement as they result from the last reform on the subject-matter so as to highlight the “dark side” of the principle at stake. The highly specific disclosing requirements provided by the current EU Directive, in fact, may seriously affect competition among bidders, which, on the contrary, has now been codified as one of the essential principle of the EU public procurement system.

In particular, after a brief introduction, the research, in Part 2, deals with the transparency requirements in the context of EU public procurement market.

Part 3 assesses the competition requirements in the EU public procurement market.

Part 4, then, examines the relationship between transparency and competition. This section is mainly dedicated to the assessment of the distortive impact of an excessive application of transparency on the competitive structure of the public procurement market. The same chapter, then, discusses one hypothesis and three sub-hypothesis that aim at illustrating the negative outcomes of the clash between transparency and competition in the EU public procurement.

Chapter 5 focuses on the potential actions that might and should be adopted to regulate the dichotomy in question. Among the others, three strategies are articulated as the subject of specific recommendations addressed to the EU Institutions, the national authorities and the businesses. Finally, Part 6 briefly concludes.

Part 2

Transparency requirements in the EU public procurement market

Public procurement represents a key tool of the Europe 2020 strategy for the promotion of a modern, efficient and sustainable economy and, at the same time, involves a large use of public expenditure. As already stressed, pursuing the achievement of these fundamental societal goals as well as improving the efficiency and effectiveness of public expenditure are the main general purposes of the recently reformed EU public procurement system.

According to the proposal presented for the adoption of the current EU Directive on public procurement4, the legislative framework has allowed the realization of “a culture of transparency”

4 _{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.

See Directive, in particular, Article 1(2): “[P]rocurement within the meaning of this Directive is the acquisition by means

of a public contract of works, supplies or services by one or more contracting authorities from economic operators chosen by those contracting authorities, whether or not the works, supplies or services are intended for a public purpose”.

According to the reports of the European Commission, every year, in the EU, around 14% of the GDP is spent on public purchases, which represents a substantial part of the EU economy (see https://ec.europa.eu/growth/single- market/public-procurement_it).

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that has resulted in an increasing quality of procurement outcomes as well as in a better use of public funds5.

By facilitating an adequate flow of information on prices and other commercial conditions and granting an equal access to it, transparency encourages a greater participation of the undertakings, including the SMEs, to public activities and enhances market competitiveness.

Transparency represents, in fact, one of the main instrument adopted by the current EU Directive to promote and protect the efficiency of the public procurement market.

Despite its broad nature and the lack of a proper definition6_{, the prominence of transparency is clearly}

stressed in the context of EU public procurement.

Indeed, as far as the area of public procurement is concerned, EU law, first, requires the observance of a general duty to ensure, “…for the benefit any potential tender, a degree of advertising sufficient

to enable the services market to be opened up to competition and the impartiality of the procedures

to be reviewed”7.

As a consequence, for public contracts over certain thresholds, first of all, transparency is explicitly proclaimed as one of the essential rules to take into account in the awarding procedures8.

Therefore, imposing compliance with the fundamental principle of transparency means that contracting authorities have to treat all the economic operators in a transparent way, by informing them on the necessary procedure details and guaranteeing them equal conditions of participation. Then, in accordance with the general principle at issue, a number of concrete disclosure and objectivity requirements are imposed both on contracting authorities and on the companies acting in

5 _{European Commission, Proposal for a Directive of the European Parliament and of the Council on public procurement,} 20 December 2011, COM (2011) 896 final, p. 5, available at < https://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:52011PC0896&from=EN>.

See also European Commission, Report from the Commission to the European Parliament and the Council: EU Anti- Corruption Report, 3.2.2014 COM(2014) 38 final, available at

<https://ec.europa.eu/home-affairs/sites/homeaffairs/files/e-library/documents/policies/organized-crime-and-human trafficking/corruption/docs/acr_2014_en.pdf.>.

Its origin as a fundamental instrument to ensure openness, accountability on the part of the contracting authorities and to avoid discrimination on the ground of nationality is to be found in the European courts’ case law.

See, among the others, Case C-87/94, Commission of the European Communities v Kingdom of Belgium [1996] ECLI:EU:C:1996:161, which was the first case in which transparency was ever mentioned, and C-195/04, Commission

of the European Communities v Republic of Finland [2007] ECLI:EU:C:2007:248.

6 _{A description can be found in the ECJ case-law, which has identified transparency “…with the quality of being clear,}

obvious and understandable without doubt or ambiguity”.

See, among the others, Opinion of the Advocate General Ruiz-Jarabo Colomer of 16 December 2004 in C-110/03,

Belgium v Commission, 14 April 2005, ECLI:EU:C:2005:517, para. 44.

See also Irena Georgieva, The EU Principles in Public Procurement. Transparency – Origin and Main Characteristics in Using Transparency Against Corruption in Public Procurement, Studies in European Economic Law and Regulation, Volume 11, Springer, Cham, 2017, pp. 13-15.

See also case C-329/8, Telaustria Verlags GmbH and Telefonadress GmbH v Telekom Austria AG, para. 62.

7 _{“Effective competition, then, removes barriers that prevent new players from entering the market; benefits contracting}

entities which can choose from among more tenderers and, thus, are more likely to obtain value for money; and helps maintain the integrity of procurement procedures as such”.

See case Opinion of Advocate General Poiares Maduro of 17 December 2008 in C-250/07, Commission of the European

Communities v Hellenic Republic, 4 June 2009, ECLI:EU:C:2008:734, para 9.

See also Case C‑399/98, Ordine degli Architetti and Others [2001] ECLI:EU:C:2001:401, para 75; Joined Cases C‑285/99 Impresa Lombardini SpA v ANAS and 286/99 Impresa Ing. Mantovani v ANAS [2001] ECLI:EU:2001:640, para 35; and Case C‑26/03 Stadt Halle v Arbeitsgemeinschaft Thermische Restabfall and Others [2005] ECLI:EU:C:2005:5, para 44.

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7 the public procurement market, with the aim “…to ensure that economic operators from across the

Single Market benefit fully form the basic freedoms in competing for public contracts”9.

On this purpose, in line with the OECD Recommendations10, which consider each segment of the market as subject to a different transparency regime, depending on the nature of the peculiar area of regulation, the European legislator has introduced a set of specific disclosure rules to govern the public procurement system.

In principal, as explicitly observed by the OECD, the promotion of an “adequate degree of

transparency of the public procurement system”11 at all stages of the procurement process seeks

specifically to achieve three fundamental objectives.

A first aim is promoting free access to public procurement information to all interested parties so as to broaden the opportunity to participate to the award process. The enhancement of the possibility to know and, consequently, exchange the details concerning a procurement procedure needs then to be balanced in order not to encourage interested parties to engage in collusive behaviours and practices. Secondly, transparency acts as an essential tool to ensure a fair and equal treatment among potential suppliers. In this perspective, a right amount of information regarding the procurement procedure has to be revealed to the candidates and tenderers, respecting the necessity to protect trade secrets and other confidential details, which can be used to hinder genuine competition.

Finally, the specific set of disclosure rules, applicable in the public procurement setting, serves the purpose to allow all the stakeholders to control public expenditure, ultimately seeking to improve value for taxpayers’ money.

The same objectives are to be achieved by the current EU Directive, which clearly aims to obtain “greater transparency and higher level of competition while achieving measurable savings through

lower prices”12.

In particular, in order to effectively ensure and enhance fairness and transparency within the peculiar sector of the public procurement market, the new EU legislation provides a system of concrete disclosure obligations that have to be fulfilled at various stages of the procedure by the authorities as well as by the tenderers13_.

Depending on the specific phase of the procurement cycle, the function performed by transparency may change, ranging from granting equal treatment and broad participation to the public procurement procedures to ensuring the integrity of the process through the review of public authorities’ conducts14.

9 _{European Commission, Proposal for a Directive, p. 3.}

10 _{Among the others, see OECD, Recommendation on Fighting Bid Rigging in Public Procurement [C(2012)115, 17} July 2012] available at < http://www.oecd.org/daf/competition/RecommendationOnFightingBidRigging2012.pdf>. OECD, Guidelines for Fighting Bid Rigging in Public Procurement [DAF/COMP(2009)1/FINAL,2009] available at < https://www.oecd.org/competition/cartels/42851044.pdf>.

See also OECD Recommendation of the Council on Public Procurement – Directorate for Public Governance and Territorial Development, 2015, available at < https://www.oecd.org/gov/ethics/OECD-Recommendation-on-Public- Procurement.pdf>; and OECD, Competition and Procurement, Key Findings 2011 – Competition Committee, available at < http://www.oecd.org/daf/competition/sectors/48315205.pdf>.

11 _{OECD Recommendation on Public Procurement, p. 6, 2015.} 12 _{European Commission, Proposal for a Directive, p. 2.}

13 _{Directive 2014/24/EU, Section 2, Publication and Transparency, Articles 48 et seq.}

See case C-87/94, Belgium v Commission: “[T]he procedure for comparing tenders therefore had to comply at every

stage with both the principle of the equal treatment of tenderers and the principle of transparency so as to afford equality of opportunity to all tenderers when formulating their tenders”.

14 _{Kirsi-Maria Halonen, Disclosure rules in Public Procurement: Balancing between Competition and Transparency in} Journal of Public Procurement, Volume 16, Issue 4, 2016, pp. 536-537.

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As noted in the Proposal for the adoption of the current EU Directive on public procurement, in particular, ensuring a wider access to the awarding procedure, with the inclusion of the medium- sized enterprises, can broaden the supplier base, thus increasing the conditions of competition in the market concerned15.

Similarly, a correct exchange of information among the main actors of the public procurement market, encouraged by the greater transparency pursued by the current EU Directive, serves the purpose of avoiding situations of unfair advantages, favouritism and distortions of competition16.

Thus, first, before the beginning of the procedure, the contracting authorities have to communicate their “intentions of planned procurements” through the publication on their buyer profile or by the Publications Office of the European Union of the so called “prior information notice”. The latter, among the other information, specifically includes a description of the nature and the general characteristics of the works, supplies and services constituting the object of the procurement procedure17.

Similarly, through the publication of the “contract notice”, the procuring authorities announce their will to award a contract and the exact criteria that will drive them in the selection of candidates as well as in the awarding process18.

Furthermore, not later than 30 days from the decision to conclude a contract, the authorities have to send a notice reporting the results of the procurement procedure19.

According to the Court of Justice, the provision of the publication of the award criteria in advance is a clear expression of the principle of transparency that, on the one hand, grants participants an adequate period of time in order to process and equally interpret the procedure’s requirements and, on the other hand, limits the discretion left to the contracting authorities20.

While before the start of the procedure, availability of information serves the purpose of allowing the potential tenderers to evaluate the importance of the contract and the requirements necessary to perform it21, during the course of the awarding process, the need of impartiality and integrity demands for an almost total absence of transparency.

In this phase, although procurement authorities cannot provide any type of details concerning the tenders proposed so as to avoid favouritism, transparency is still significant in terms of equal and objective application of the criteria.

Finally, after a contract have been awarded, the relevance of transparency is to be found in the substantial prohibition to modify the terms of the contract. Put in other words, as set out in the

See Directive 24/2014/EU, Recital 45: “…In order to ensure transparency and traceability of the process, all stages

should be duly documented. Furthermore, all tenders throughout the procedure should be submitted in writing”.

15 _{European Commission, Proposal for a Directive, p. 10.} 16 _{Id., p. 11.}

17 _{Directive 2014/24/EU, Article 48.} 18 _{Directive 2014/24/EU, Article 49.} 19 _{Directive 2014/24/EU, Article 50.}

20 _{Case C-87/94, Belgium v Commission, para. 55.}

See also Case T-70/05, Evropaïki Dynamiki – Proigmena Systimata Tilepikoinonion Pliroforikis kai Tilematikis AE v

European Maritime Safety Agency (EMSA) [2010] ECLI:EU:T:2010:55, where, at paragraph 130, the Court said that:

“The aim of those provisions is, accordingly, to allow all reasonably well-informed and normally diligent tenderers to

interpret the award criteria in the same way and, consequently, to have equal opportunity in formulating the terms of their tenders”.

See also C-496/99, Commission of the European Communities v CAS Succhi di Frutta SpA [2004] ECLI:EU:C:2004:236, para. 18: “Once the contract had been awarded, there is a contractual relationship between the Commission and the

individual successful tenderer, each party being obliged to comply with the terms of the agreement entered into. By contrast, at that stage of the procedure the Commission no longer has a relationship with the unsuccessful tenderers”.

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9 current EU Directive22_{, at this stage, the parties are not allowed to amend an awarded contract or a}

framework agreement, altering the overall nature of it.

As noted by the ECJ in a number of different occasions, in order to ensure that the principles of transparency and equal treatment are respected, a contract needs not to be materially modified during its currency. According to the Court, in fact, substantial amendments would constitute a new award with the consequence of an overall reduction in the efficiency of the system of remedies. Indeed, if the parties had known that the terms of contract could have changed, they would probably have acted differently23.

A lack of information would ultimately result in a drastic impairment of the legal certainty of the public procurement system in its entirety, which requires the contracts’ details to be public or accessible in order to enable the parties to challenge the violations of the related rules24.

In the procedure in question, if demanded, any unsuccessful candidate or tenderer has to be informed about the grounds of the rejection respectively of its request to participate or its offer. Similarly, those who have submitted an admissible offer need to be informed on the details of the tender selected as well as to be kept updated on any progress of the negotiations with other bidders25.

The importance of this further aspect of the principle of transparency has been constantly stressed by the Court of Justice. In fact, it contributes to a better understanding by candidates and bidders of the underlying rational of the authorities’ decisions, enabling them to exercise their essential right of defence26_.

Raising the overall participants’ awareness with the purpose to help them making appropriate choices benefits also the society as a whole, the rational management of public procurement resulting in a higher quality of the services, works or goods awarded.

The disclosure of a right amount of information as well as the fair exchange of them among the main actors of the public procurement market, in fact, leads to broaden the number of potential participants and to improve the control over the conducts adopted during the entire procedure and even after the end of it.

In this regard, according to the current EU Directive27, and confirmed by the recently adopted Directive on the protection of undisclosed know-how and business information (‘EU Directive on the protection of undisclosed know-how’)28, on the one side, contracting authorities are allowed to impose on the participants an obligation to observe various requirements aimed at safeguarding the sensitive character of the information disclosed during the procedure. On the other side, however,

22 _{Directive 24/2014/EU, Article 72.}

23 _{In particular, C-454/06, Pressetext Nachrichtenagentur GmbH v Republik Österreich (Bund) and Others [2008]} ECLI:EU:C:2008:351, para. 34: “…in order to ensure transparency of procedures and equal treatment of tenderers,

amendments to the provisions of a public contract during the currency of the contract constitute a new award of a contract […] when they are materially different in character from the original contract and, therefore, such as to demonstrate the intention of the parties to renegotiate the essential terms of that contract”.

See also Case C-337/98 Commission v France [2000] ECLI:EU:C:2000:543, para. 44 and 46.

24 _{Case C-161/13, Idrodinamica Spurgo Velox srl and Others v Acquedotto Pugliese SpA [2014] ECLI:EU:C:2014:307,} para. 37: “[I]n accordance with the case-law of the Court, effective procedures for review of infringement of the provisions

applicable in the field of public procurement can be realised only if the periods laid down for bringing such proceedings start to run only from the date on which the claimant knew, or ought to have known, of the alleged infringement of those provisions”.

25 _{Directive 24/2014/EU, Article 55.}

26 _{See Case C-629/11 P, Evropaïki Dynamiki.} 27 _{Directive 2014/24/EU, Article 21.}

28 _{Directive 2016/943/EU of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed} know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure [2016] OJ L 157/1.

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they are also obliged not to reveal confidential information forwarded to them by the economic operators during the awarding procedures. Unless otherwise specifically provided, public authorities should observe the confidentiality obligations resulting from the information passed on by technical or trade secrets and the confidential details of tenders, even after the conclusion of the awarding procedure.

As a result, a balanced application of the principle of transparency in the context of each stage of the public procurement cycle may serve as an essential tool for the achievement of better outcomes in terms of competition, leading to reduce the waste of public money to the benefit of the participants, the public authorities and the European taxpayers.

This is, furthermore, especially important considering the new dimension acquired by the EU public procurement in the framework of the last reform, which has contributed to the general simplification of the procedures by cutting red tape and enhancing the use of electronic means of communication29. In particular, with a view to simplify and modernize the procedures, the current EU Directive introduces the use of means of electronic communication30 _{as a standard rule to improve the efficiency}

of the procurement process across the internal market.

Therefore, according to the new legislation31, the transmission of all the notices, the documents, the communications in the electronic form should be made obligatory, thus allowing a more flexibility in the procedure and a reduction of the errors resulting from the wrong interpretation of the current EU Directive on public procurement32.

In this perspective, although the trend towards an easier and wider access to information is fundamental for preventing arbitrariness and fraudulent practices, more attention must be paid with regard to the competition issue, which calls for a more nuanced approach.

The consolidation of the principle of competition in the current EU Directive has brought about an increased role of competition as a driver in the context of the public procurement procedures, which now requires any type of distortions or restrictions to be firmly prevented.

As it will be furthered explained, a number of specific provisions have been introduced in order to promote and protect competition particularly against serious collusive outcomes facilitated by an excessive and unnecessary transparency within the public procurement market.

Part 3

Competition requirements in the EU public procurement market

As already stressed in chapter 2, the main goals of the current EU legislation are to promote greater transparency as well as a higher level of competition, while ensuring a more rational use of public funds.

29 _{The last reform has brought about a new trend towards a new and simplified model of e-procurement through a wider} use of electronic means of communication in the public procurement field. See, for instance, Article 53 Directive 2014/24/EU, which provides the “unrestricted and full direct access free of charge to the procurement documents”. 30 _{Directive 2014/24/EU, Article 2, n. 19): “electronic means’ means electronic equipment for the processing (including}

digital compression) and storage of data which is transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means”.

31 _{See Directive 2014/24/EU, Recital 52.}

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11 In particular, effective competition has always been recognized as a relevant objective of the EU public procurement law.

Since the first European legislation on the subject-matter, the adoption of a pro-competitive approach has constantly characterized the structure of the public procurement system.

Even the Court of Justice has repeatedly stressed that “the opening up of public procurement to

Community competition”, deriving from “a substantial increase in the guarantees of transparency

and non-discrimination”33, plays the key role of ensuring free movement in respect of public contracts

among the Member States.

No more doubts can be finally casted34 _{on the relevance of undistorted competition after the entry into}

force of the current EU Directive35, which has clearly consolidated the related principle as one of the fundamental rules governing public procurements.

Article 18 of the current EU Directive, in fact, proclaims competition among the general principles of the EU public procurement regime, thus requiring the same observance asked for the other pillars of the system, such as non-discrimination, equal treatment and transparency.

According to the wording of the provision at issue public procurement has to be designed without the “intention of artificially narrowing competition”36_{, in particular, by pursuing any kind of conduct or}

practice that could unduly favour or disadvantage certain economic operators.

Therefore, in principal, the article implies that the entire set of rules governing the purchasing procedure has to be applied and interpreted in a pro-competitive way by all the contracting entities operating in the procurement market, the latter being required to avoid “any procurement practices

that prevent, restrict or distort competition”37.

33 _{Case C-470/99, Universale Bau AG and Others v Entsorgungsbetriebe Simmering GmbH [2002] ECLI:EU:C:2002:746,} para. 4.

See also joined cases C-285/99 and C-286/99, Impresa Lombardini SpA v ANAS – Ente nazionale per le strade and Società

Italiana per Condotte d’Acqua Spa; and Impresa Ing. Mantovani SpA v ANAS – Ente nazionale per le strade, Ditta Paolo Bregoli [2001] ECLI:EU:C:2001:640.

34 _{The lack of a specific provision that qualifies competition as a principle, however, has led to some criticisms with regard} to the effective function of competition in the context of public procurement.

According to this line of thought, the well-functioning of the market could have only been achieved by granting the prohibition of discrimination on the basis of nationality; ensuring the monitoring function of transparency and removing barriers to market access so as to obtain a broader participation by the undertakings to the award procedures. The conclusion at issue was based on a narrow idea of competition as an instrument merely inherent to the development of the private market, that implied the rejection of any possibility of implementing the concept in the different context of the public market. Even the explicit reference to the “…the opening up of procurement to competition” contained in the recital of the Directive of 2004 was considered not to be an adequate basis to justify a wide conception of competition as an autonomous principle governing the EU public procurement system.

See Sue Arrowsmith, The Purpose of the EU Procurement Directives: Ends, Means and the Implications for National

Regulatory Space for Commercial and Horizontal Procurement Policies in The Cambridge yearbook of European legal

studies, Volume 14, 2011-2012, pp. 1-47; Peter Kunzlik, Neoliberalism and the European Public Procurement Regime in The Cambridge yearbook of European legal studies, Volume 15, 2012-2013, 312–356.

35 _{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, OJ L 94/65.

36 _{An issue arises with regard to the introduction of the subjective element of the ‘intention’, which needs to be further} interpreted.

The problem is linked to the subjective nature of the wording of the provision and it is particularly significant in relation to the question of the coordination with the rules on competition law. As stated by the Court of Justice, in fact, for a restriction of competition by object to exist it is not relevant the actual intention that has guided the undertaking in the unlawful practice. See, in this regard, case T-143/89, Ferriere Nord v Commission [1995] ECLI:EU:T:1995:64; case T- 11/06, Romana Tabacchi v Commission [2011] ECLI:EU:T:2011:560.

37 _{Albert Sanchez Graell, Truly competitive procurement as a Europe 2020 lever: what role for the principle of competition}

in moderating horizontal policies? UACES 45th Annual Conference Bilbao, Spain, September 2015, available at <

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Moreover, the competitive-oriented approach also entails that any economic operator has to refrain from engaging in any kind of unfair practice or behaviour that could facilitate collusive outcomes. As further explained in the following paragraphs, any anti-competitive conduct performed by an undertaking in the context of a procurement procedure is to be considered illicit and violate the general principles of the EU law.

Thus, given the already stressed interconnection between the EU public procurement system and the EU competition law, after the consolidation of the principle of competition in the former context, the two systems of rules can be conceived as integrating each other in order to respectively improve their functioning. In this sense, in particular, whenever a certain practice, adopted in the framework of a public award procedure, has the effect of hindering competition, it must be intended as being in violation of both public procurement and competition law38_{. That also carries significant implications}

in terms of enhanced opportunities to pursue and monitor unfair conducts.

Then, in order to concretely pursue the promotion of the opportunity for bidders to compete on a level-playing field, and the related increase of the efficiency of public spending together with the achievement of better procurement outcomes, the current EU Directive introduces a number of specific disclosure requirements39.

In more detail, a set of peculiar features are provided by the current EU Directive in order to reduce the risk of the adoption of anti-competitive conducts on the part of the bidders. In particular, according to the OECD Recommendations and Guidelines, specific measures that can be adopted in order to guarantee a fair public procurement setting are, for instance, the clear definition of the requirements and the reduction of communication among tenderers, which also helps avoiding predictability. The same purpose is also served by the careful choice of the award criteria, which needs to be guided by the intent to ensure effective competition and also by the performance of awareness-raising activities about the serious risks of collusion in procurement40.

Although the current legislation does not specifically refer to all these elements, the general pro- competitive interpretation of the entire regime, resulting from the consolidation of the new fundamental principle, is supported by a number of significant instruments that seek to guarantee a fair procurement process.

First of all, the reformed EU legislation clearly recognizes the fundamental role played by the awarding criteria in ensuring genuine competition among tenderers. By encouraging compliance with transparency and the other fundamental principles, they allow an objective comparison between the different tenders proposed “in conditions of effective competition”41_{, which must be accompanied by}

the clear explanation of the choice made by the public authorities42.

38 _{See Albert Sanchez Graell, The Principle of Competition Embedded in the EU Public Procurement Directives, in Public} Procurement and EU Competition Rules, Hart Publishing, 2nd _{ed., 2015, pp. 200-201 and Id., More Competition Oriented}

Public Procurement to Foster Social Welfare. Towards New Horizons in Public Procurement, KV Thai, ed., Boca Ranton,

FL, PrAcademics Press, 2010, available at <https://ssrn.com/abstract=1576698>.

39 _{On this purpose, the strengthening of competition among tenderers through the right application of transparency} within the procurement procedures constitutes one of the main goals pursued by the new legislation in order to guarantee the integrity and the well-functioning of the public procurement market

See European Commission, Green Paper on the Modernization of EU Public Procurement Policy-Towards a More Efficient European Procurement Market [COM(2011)15 final, 27 January 2011] available at <https://eur- lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52011DC0015>.

40 _{OECD, Recommendation on Fighting Bid Rigging in Public Procurement; Id., Guidelines for Fighting Bid Rigging in} Public Procurement.

41 _{Recital 90, Directive 2014/24/EU.} 42 _{Article 67, Directive 2014/24/EU.}

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13 Then, with the particular aim to strengthen the fight against collusion, the current EU Directive establishes a regime of disqualification that helps preventing the undertakings involved in the procedures from engaging in collusive practices.

According to Article 57, contracting authorities can exclude from a procedure any economic operators that, among the others, “has entered into agreements with other economic operators aimed at

distorting competition”43, if there are sufficient indications in this sense. Moreover, the

disqualification follows also a distortion of competition that results from a prior involvement of the economic operator in the procedure and that cannot be removed in another less restrictive way44. The fact that all the illicit activities carried out with the intention to manipulate the outcome of the procedure in an anti-competitive way are to be considered in breach of the EU basic principles45, greatly contributes to clarify the requirements of the related procedures.

In the same vein, the provision of the preliminary market consultations seeks to ensure equal conditions of competition among bidders, trying, in particular, to avoid predictability in procurement. The practice concerned, in fact, may help public authorities to obtain information on the structure and the characteristics of the market and allow economic operators to better understand procurement plans and requirements. However, consultations can also pose some significant competition concerns. Preliminary contacts with market participants can easily “…result in an unfair advantages and

distortions of competition”46, which, in particular, can lead to collusive behaviours among participants

and even to the more serious practice of bid rigging47.

Similarly, competition issues may arise in relation to the disclosure of confidential and business information, including trade and technical secrets and other sensitive aspects of tenders, which are forwarded by economic operators in the course of the awarding procedures48. In this regard, as stressed by the case law, serious risks of potential collusion are likely to emerge in case of a strategic use of the tender challenge mechanisms, bid protests and review procedures in order to obtain the revelation of sensitive information or business secrets from competitors49.

Therefore, in order to prevent participants from an unfair use of confidential information, made available throughout the procurement process, the current EU Directive allows contracting authorities to impose on undertakings a duty to observe specific requirements. Furthermore, according also to the current EU Directive on the protection of undisclosed know how and business secrets50_{, public}

authorities can also withhold certain details on the contract award from being published, where their disclosure might alter genuine competition between undertakings51.

43 _{Article 57(4) letter d), Directive 2014/24/EU.} 44 _{Id., letter f).}

45 _{European Commission Proposal for a Directive, p. 11.} 46 _{Article 40, Directive 2014/24/EU.}

47 _{European Commission, Proposal for a Directive, p. 12.}

48 _{According to Albert Sanchez Graell, the problem of the negative impact on competition resulting from the disclosure} of confidential information is not properly considered by the European Courts. The latter, in particular, by stressing the role of transparency in the procurement process, has focused its attention only on the prevention of corruption, without take into account the issue of the balance with the risk of collusion in the market concerned.

See Albert Sanchez Graell, Public Procurement and Competition: Some Challenges Arising from Recent Developments in EU Public Procurement Law in Research Handbook on European Public Procurement, ed. C. Bovis, Cheltenham: Edward Elgar Publishing, 2016, pp. 423-451.

49 _{See case T-9/10, Evropaiki Dynamiki v Commission (Microsoft SharePoint) [2013] EU:T:2013:88; case T-183/10,}

Sviluppo Globale GEIE v Commission [2012] EU:T:2012:534.

50 _{European Directive 2016/943/EU of the European Parliament and of the Council of 8 June 2016 on the protection of} undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure [2016] OJ L 157/1.

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However, the new provision on ‘confidentiality’ leaves also rooms for exceptions and, in particular, for those stemming from the different national legislations on access to information to which every contracting authority is subject.

It is apparent, therefore, that, in order to avoid collusive outcomes that can restrict competition among bidders, the release of certain sensitive information needs to be balanced through a rational exercise of discretion by public authorities.

This is particularly true considering that, over the years, the availability of any type of information has become easier according to the increasing adoption of electronic systems of communication. The influence of the growing modern trend towards the use of electronic means of communication has led the new EU legislation to explicitly promote the adoption of eProcurement, by requiring Member States to shift to the electronic system in order to enhance suppliers’ participation across the Internal Market.

The current EU Directive, in particular, provides for the mandatory electronic transmission of the notice, requests of participation and tenders; for the electronic availability of procurement documents52 and, in general, for the switch to electronic communication at all stages of the procedures53.

The relevance of eProcurement is further stressed through the introduction of a number of provisions that refer to the use of electronic means of communication as a tool to increase competition among undertakings, while helping a better control over potential restrictions such as, in particular, bid rigging54.

In fact, as explicitly pointed out by the current EU Directive, the adoption of instruments such as the electronic catalogues55 _{and the recourse to electronic auctions are intended to improve competition}

and streamline public purchasing in terms of savings in time and money56. Similarly, fully electronic tools have been introduced to support centralized purchasing techniques, which specifically seek to guarantee large volumes of purchases, thus enhancing competition57.

The latter practice, in particular, should be carefully monitored. If, on the one side, the exercise of the purchasing power by few centralized bodies can contribute to the achievement of a better value for money, through the general improvement of the procurements quality, on the other side, the excessive accumulation of buying strength in their hands can seriously alter the dynamics of the whole market, especially affecting competition among suppliers58.

However, in the current EU Directive, any specific detail on the monitoring activity is lacking and the potential risk of competition’s restrictions brought about centralized procurement do not seem to be compensated even by the use of electronic means of communication for its performance.

The latter specifies that the treatment of the acquisition of a trade secret as lawful “…should not release public authorities

from the confidentiality obligations to which they are subject in respect of information passed on by trade secret holders, irrespective of whether those obligations are laid down in Union or national law. Such confidentiality obligations include, inter alia, the obligations in respect of information forwarded to contracting authorities in the context of procurement procedures […]”.

51 _{Articles 21 and 50(4), Directive 2014/24/EU.} 52 _{Article 53, Directive 2014/24/EU.}

53 _{Recital 52, Directive 2014/24/EU.}

See also European Commission, Proposal for a Directive, p. 9. 54 _{OECD, Recommendation on Fighting Bid Rigging, pp. 2-3.} 55 _{Recitals 55, 68 and Article 36, Directive 2014/24/EU.} 56 _{Recital 67 and Article 35, Directive 2014/24/EU.} 57 _{Recital 69 and Article 37, Directive 2014/24/EU.}

58 _{As it was also stressed in the preamble, Recital 20 of the 2011 Proposal for the Directive, “the aggregation and the}

centralisation of purchases should be carefully monitored in order to avoid excessive concentration of purchasing power and collusion, and to preserve transparency and competition”.

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15 In principal, although the generalized movement towards eProcurement has led to a simplification of the procedure, often allowing a greater control of potential collusive conducts on the part of the bidders, the increased degree of transparency entailed for this purpose has posed some serious competition concerns.

In this regard, a specific limit is set by the current EU Directive, in order, in particular, to protect confidential information. Allowing public authorities to refrain from resorting to electronic means of communication so as to guarantee that certain details are not revealed appears to be in line with the general need to prevent any distortion or restriction of competition caused by an excessive transparent approach59.

Granting the main actors of the procurement market the opportunity to widely disclose and exchange information, including confidential and business details, in the name of a greater implementation of the principle of transparency, may clearly lead to the increase of collusive behaviours.

Even if the current EU Directive has strengthened the protection of fair and genuine competition among undertakings participating to the awarding procedures, the issue is still ongoing.

As it will be furthered developed in the following chapter, in fact, some serious competition restrictions may occur in case of the excessive and unnecessary application of transparency in the public procurement process.

Part 4

The distortive impact of transparency on the competitive structure of the EU public procurement market

4.1 The EU public procurement transparency rules as “facilitating practices”

Transparency plays a key role in the system of public procurement as an essential instrument to fight corruption and ensure general conditions of equality and fairness among bidders, by allowing a greater oversight activity of the procedures.

As generally recognized60_{, a certain degree of transparency is necessary not only to broaden the}

participation of undertakings to the awarding procedures, thus enhancing the suppliers’ basis, but also to raise consumers’ awareness on prices and other commercial conditions in order to allow them to make better choices.

However, the rules on transparency can also have a strong negative impact on the competitive structure of the public procurement market, since they increase the opportunity to communicate among tenderers, thus facilitating the risk of competition-restrictive outcomes.

59 _{Recitals 54, 68 and 69, Directive 2014/24/EU.}

The provision specifically provides: “[T]here can be exceptional cases in which contracting authorities should be allowed

not to use electronic means of communication where not using such means of communication is necessary in order to protect the particularly sensitive nature of information […]”.

60 _{See among the others, Irina Georgiva, The EU Principles in Public Procurement. Transparency – Origin and Main}

Characteristics in Using Transparency Against Corruption in Public Procurement, Studies in European Economic Law

and Regulation, Volume 11, Springer Cham, 2017, pp. 5-49; Carmen Estevan de Quesada, Competition and transparency

in public procurement markets in Public Procurement Law Review, Issue 5, 2014, pp. 229-244; Albert Sanchez Grael, Public Procurement and Competition.

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In particular, the general simplification of the monitoring systems of tenders’ behaviours and the reduction of the cost of exchanging information resulting from the recent reform, particularly through the provision of a wide disclosure of information and an increased use of electronic means of communication, have improved the risk of cartelization of the public procurement market.

The supply of detailed information about bidders’ identity, the characteristics of the offers presented and the auctions results, demanded by the provisions of the current EU Directive61, favour a greater interconnection among tenderers and, consequently, lead to the suppression of rivalry.

Put in other words, an excessive and unnecessary application of transparency may generate the effects that competition rules seek to avoid.

As observed by the case law and confirmed by the OECD, in fact, serious competition concerns may arise from the disclosure and the exchange of an excessive number of information, due to their contribution to the reduction or removal of “…the degree of uncertainty as to the operation of the

market in question, with the result that competition between undertakings is restricted”62.

In particular, all the details that have to be contained in the notice as well as in the procurement documents - whose access is even facilitate through the adoption of electronic means - favour collusive behaviours on the part of tenderers. The latter can, in fact, be encouraged to share strategic data, thus coordinating their conducts with the other bidders rather than competing with them63_.

This is even more serious if the information revealed in the context of a procurement procedure leads tenderers to conclude a proper agreement with the secret aim to raise prices or lower the quality of good and services. The formation of bid rigging cartels, indeed, can significantly harms the competitive structure of the public procurement marketplace, taking “resources from purchasers and

taxpayers, [and] diminish[ing] public confidence in the competitive process”64.

An accurate choice of the level of transparency is therefore required in order to avoid the adoption of unfair practices in the course of the procurement procedures and even after the end of them.

In this regard, competition issues may in particular arise in relation to the undue acquisition and use of confidential information by bidders in the subsequent phases of the procurement process. The strategic recourse to the review and challenging procedures in order to obtain confidential and business information from competitors, in fact, can encourage bidders to unfairly use the sensitive details unduly gained as well as to collude.

Although the European Courts have often dealt with this matter, “…a proper balance between

transparency and the protection of business secret”65 still has to be found, being the case law more

focused on promoting excessive disclosure with serious negative consequences for the competitive structure of the public procurement market.

61 _{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.

62 _{Case C-8/08, T-Mobile Netherlands BV and Others v v Raad van bestuur van de Nederlandse Mededingingsautoriteit} [2009] ECLI:EU:C:2009:343, para 35; see also case C-194/99 P Thyssen Stahl v Commission [2003] ECLI:EU:C:2003:527, para 81.

As firmly maintained by the OECD, in fact, the application of an “excessive and unnecessary transparency” that characterised some of the European awarding procedures, favours the formation and the implementation of collusion and bid rigging cartels.

OECD, Competition and Procurement: Key Findings, p. 19 (OECD Policy Roundtables, 2011) http://www.oecd.org/regreform/liberalisationandcompetitioninterventioninregulatedsectors/48315205.pdf 5 November 2013.

63 _{See European Commission, Notices from European Union Institutions, Bodies, Offices and Agencies, Guidelines on} the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements [2011] OJ C 11/01, p. 14.

64 _{OECD, Guidelines for fighting bid rigging in public procurement, p. 2.}

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17 The problematic relationship between transparency and competition in the context of public procurement is, therefore, still discussed and has gained even more relevance with the entry into force of the current EU Directive.

Although any specific reference is limited to the risk of collusive outcomes, the formalization of the fundamental principle of competition has encouraged a general pro-competitive interpretation of the entire public procurement system, thus putting more pressure on the issue.

From this perspective, guaranteeing the open release and exchange of information, including sensitive and business one, triggers a number of competition concerns, in particular because it facilitates serious unfair practices. Among the others, a specific attention must be paid to the potential risk of collusion, bid rigging and the unlawful use of confidential and business information concerning competitors. As it will be explained in the next paragraphs, the three hypotheses above mentioned clearly express the need to properly address and solve the clash between excessive transparency and competition.

4.1.1 Collusion among tenderers

Transparency is undoubtedly one of the main characteristics that needs to be taken into account when it comes to assessing the risk of collusion in a given market.

In the peculiar context of public procurement, transparency finds a significant expression in the opportunity for the interested parties to disclose and exchange information on the procedures. As explicitly stated in the Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, improving transparency in the market enhances the opportunity to exchange strategic details. The latter then can facilitate alignment of competitors’ behaviour, thus resulting in a restriction of competition among them66_.

First of all, in fact, transparency is able to increase the possibility to reach a common understanding between tenderers, which, as a consequence, can decide to coordinate their conducts instead of compete.

Then, sharing essential data allows the undertakings involved in the procedures to detect and sanction deviations from the collusive course of action as well as to monitor new entrants67.

In particular, the potential anti-competitive outcomes of the information exchange strongly depend on the specific conditions of the market in which it occurs, and, especially, in this case, on the level of transparency required by the related rules.

As already pointed out in the previous parts, the current EU Directive has introduced a set of concrete requirements that greatly facilitate an open flow of information throughout the awarding process. Hence, given the fact that public procurement market has some structural characteristics that favour collusive behaviours, some of the new transparency provisions may strengthen this natural inclination by increasing the available amount of information, even of the confidential one, and facilitating their access.

Indeed, “repetitive interaction and multimarket contacts […] are fundamental for the purpose

described and are easy to find “in public procurement markets where biding processes take place

66 _{Guidelines on the applicability of Article 101, para 2.2(65), p. 15, which provides that: “[B]y artificially increasing}

transparency in the market, the exchange of strategic information can facilitate coordination (that is to say alignment) of companies’ competitive behaviour and result in restrictive effects on competition”.

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on a regular basis and its coordinating effects may be emphasized […] if suppliers are conglomerates,

joint ventures or alliances that operate and interact in several markets”68.

According to the current EU Directive all the details that are to be included in the prior information notices, the contract notices and the contract award notices, especially those related to the products, services or works requested and the specific characteristics of the procedure, are able to contribute to reduce the complexity of the market, thus improving the opportunity to collude69.

Similarly, the identification of the terms and conditions of the offers resulting from the disclosure of sensitive and business data can lead to a reduction of the strategic uncertainty that, in turn, encourages bidders to adopt concerted conducts, while allowing the control over potential deviations from the common action.

The described framework gets even more critical considering that the current EU Directive has significantly increased the use of electronic means of communications, imposing the electronic transmission of any notice, requests of participation and tenders, the electronic availability of each procurement document and the general switch to electronic communication at every stage of the public procurement cycle70_.

If, one the one side, the use of an electronic system of communication and information could contribute to obtain a simplified public procurement setting, on the other side, it also increases the amount of information available for tenderers, therefore improving their possibility to coordinate their behaviours, monitor each other and punish eventual deviances.

As already observed, these are the main elements that are required for collusion to exist and, in the peculiar sector of public procurement, substantially constitute the result of the irrational and excessive application of transparency.

4.1.2 Bid rigging

The unrestricted disclosure and communication of information can also lead to even more serious distortions of competition among tenderers, which, in particular, can consist in the conclusion of proper agreements aimed to fix prices and quantities71.

On this purpose, significant issues are posed by the practice of bid rigging, that is one of the most prosecuted form of hard-core cartel activity, prohibited by Article 101(1) TFEU as having as its object the restriction of competition among economic operators.

According to the Guidelines elaborated by the OECD, “[B]id rigging occurs when businesses, that

would otherwise be expected to compete, secretly conspire to raise prices or lower the quality of goods or services for purchasers who wish to acquire products or services through a bidding

process”72_.

68 _{Carmen Estevan de Quesada, Competition and transparency, p. 8.}

69 _{In particular Section 2, Articles 48-55 and in Annex V, Directive 2014/24/EU.} 70 _{See, in particular, Recital 52, Directive 2014/24/EU.}

Competition concerns nay arise also in relation to electronic auctions, whose function is to present “new prices, revised

downwards, and/or new values concerning certain elements of tenders”. Due to the repeated interactions of bidders

entailed by the system at issue, there could be the risk of collusive outcomes.

See Article 35, Directive 2014/24/EU and Stefan E. Weishaar, Auction Theory and Collusion in Cartels, Competition and

Public Procurement – Laws and Economic Approaches to Bid Rigging – New Horizons in Competition law and

Economics series, Edward Elgar Publishing, 2013, pp. 36-61. 71 _{Guidelines on the applicability of Article 101, para 2.2, p. 15.}

72 _{OECD, Guidelines for fighting bid rigging in public procurement, p. 2.} See also OECD, Recommendation on Fighting Bid Rigging

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19 It can be implemented through a number of different techniques, such as cover bidding, which is the most frequent type and is meant to give the appearance of effective competition; then there could be the case of an agreement concluded among tenderers in order not to compete or to rotate their bids. Finally, tenderers can also decide to compete only for certain customers or geographic areas73. The practice at issue is particularly damaging in the context of public procurement, where the consequences of the higher costs of purchasing as well as the lower quality of goods and services are ultimately bore by the taxpayers and end consumers.

Nonetheless, it is very frequent in the public procurement market.

First of all, in fact, as already noted, the sector concerned is per se prone to collusion and bid rigging, due to some of its structural characteristics.

In this sense, bid rigging is more likely to occur in a market characterized by few suppliers, quite strong barriers to enter and where there is a “constant, predictable flow of demand from the public

sector”. Furthermore, the chances of collusion among tenderers even grow in case of frequent

repetitive biddings, which regard identical or very similar products or services, thus making easier for economic operators to agree on prices, range or quality74_.

Then, given the natural inclination of the public procurement market to facilitate the occurrence of serious collusive practices, certain transparency rules contribute to ease the formation of this type of hard core cartels.

Whereas bid rigging is the result of three essential factors, namely a common understanding among tenderers; the oversight and targeting activity over the other cartel’s members and the sanctioning activity in case of deviances, emphasizing the role of transparency greatly increase predictability as the essential basis of such a collusive practice75.

As a matter of fact, even though the current EU Directive explicitly allows contracting authorities to exclude from the procedure those tenderers that are sufficiently proven to have “…entered into

agreements with other economic operators aimed at distorting competition”76_{, this sanctioning}

mechanism still does not seem to be a sufficient answer to deter bid rigging cartels.

The transparency requirements imposed by the current EU Directive, in fact, may clearly lead to a different outcome77. All the provisions that refer to the identity of tenderers, prices and all the

73 _{OECD, Guidelines for Fighting Bid Rigging, p. 3}

For a definition of bid rigging, see also European Commission, “Bid Rigging”, Glossary of terms used in EU competition policy, July 2002, available at <https://publications.europa.eu/en/publication-detail/-/publication/100e1bc8- cee3-4f65-9b30-e232ec3064d6/language-en>.

74 _{OECD, Guidelines for Fighting Bid Rigging, pp. 4-5.}

75 _{“Strategies to address collusion and corruption in public procurement must address a fundamental tension: while}

transparency of the process is considered to be indispensable to corruption prevention, excessive and unnecessary transparency in fact facilitates the formation and successful implementation of bid rigging cartels”.

OECD, Competition and procurement: Key Findings, p. 20, available at < http://www.oecd.org/daf/competition/sectors/48315205.pdf>.

76 _{Article 57(4)(d), Directive 2014/24/EU.}

See also Article 57(4)(f), which regards the exclusion “where a distortion of competition from the prior involvement of

the economic operators in the preparation of the procurement procedure, as referred to in Article 41, cannot be remedied by other, less intrusive measures”.

77 _{The relevance of a high level of transparency in public procurement has been constantly maintained also by the} European Court of Justice, which, since the first cases on the subject-matter, has always stressed its fundamental role in guaranteeing equal and impartial procedures. See, for instance, case C-324/98, Telaustria Verlags GmBH v Telekom

Austria AG.

The problem regards, in particular, the recent cases, where the ECJ is not able to properly address the issue of the adequate quantity of information, including the confidential one, that need to be disclosed in order not to hinder the genuine competition among tenderers. See, among the others, case C-629/11 P Evropaïki Dynamiki v Commission [2012] ECLI:EU:C:617.