1. Collusive Bidding in Ireland – understanding the legal requirements
CMG Conference – 3 December 2015
Speaker: Alan McCarthy, Partner, A&L Goodbody

2. Outline The law on collusive bidding
The approach to collusive bidding by the Competition and Consumer Protection Commission (CCPC)
Lessons from competition investigations in the construction sector
How to comply with competition law when tendering as part of a consortium
Evidence of collusive tendering and managing dawn raids.

3. Collusive bidding – The rules and regulators
Two key rules
No anti-competitive agreements (e.g. in the context of competitors / potential competitors jointly bidding)
No abuse of dominance
Regulators
Competition and Consumer Protection Commission (CCPC)
EU Commission
The Garda Síochána

4. Collusive bidding – Consequences?
Jail: up to 10 years
Fines: up to €5 million or 10% of group turnover
Disqualification as a director
Possible follow on legal actions
Damage to business and reputation
Irish Rail (alleged bid-rigging) and Mayo Waste (waste collection tender prosecution)
Current industrial flooring contractors case – alleged price-fixing
Ireland – 33 convictions (highest = 2 years (suspended) sentence and €80,000 fine)
Dawn raids

5. The law on collusive bidding
What is collusive bidding?
Competitors agree on who will win a tender.
Two or more firms agree not to bid against one another for a tender or contract. This means that the winning tender price will be too high.
Bid suppression
Complementary bidding (“cover pricing”)
Bid rotation

6. UK and EU construction cartels cases
Examples from the UK and EU
1. UK Construction Sector Cartel
£129m fines on 103 construction firms for colluding with competitors on building contracts (covers).
2. UK (on-going) investigation
Supply of products to construction industry - 7 arrests
3. UK and EU marine hose cartels – 2007/2009
Supply of marine hose – bid-rigging – UK (imprisonment and director disqualification) and EU (€131m fines)
4. Denmark – Construction cartel
Co-ordination of tenders/bid-rigging – fines
5. EU Elevators and Escalators Cartel
Otis, Schindler, ThyssenKrupp, Mitsubishi - bid-rigging - €992m fines

7. Tendering as part of a consortium
CCPC view on how to comply with competition law
Members are not actual or potential competitors or
Members all owned by same parent or
None of the members could individually fulfil tender requirements; and
No subset of members could fulfil the requirements; and
Minimum info exchange and “need to know” restriction; and
Members compete as normal in all other contexts or
Do “efficiency gains” outweigh anti-competitive effects of consortium?
(i) Notify purchasing body of consortium; (ii) limit and control information and (iii) be vigilant and reactive of anti-competitive effects of co-operation

8. Tendering as part of a consortium
What if members decide to try to weigh pro v anti-competitive effects?
Do members individually meet tender requirements?
Effect on prices/product quality?
How competitive is the market - market shares?
Real efficiency gains and consumer benefits?
Restrictions in consortium indispensable to gain the efficiencies?
Does bid substantially eliminate competition?
Remember: No price-fixing/market-sharing/customer allocation/bid-rigging

9. Consortium bids – Risk reduction
How to reduce risks:
Notify purchasing body of consortium
Tell purchasing body if a consortium member is in more than one consortium
Scope of co-operation
Limit discussions and access to materials
Third party to manage bid/filter data
Confidentiality agreements (e.g. for sub-contractors in multiple bids)
“Need to know” restrictions re data
If win – separate JV to carry-out work
Object if discussion strays into danger territory

10. Indicators of possible collusive tendering
Comments by bidders/technical consultants suggesting collusion
Unusual bidding patterns e.g. pricing/rotation
Absence of bid from likely bidder
Correspondence between bidders/similar or unusual bid wording
Identical prices/lack of detail/lowest bidder not taking contract

11. Indicators of possible collusive tendering
Sub-contracting between bidders
last minute changes/suspiciously high bids
identical/similar phrases, excuses or spelling mistakes/miscalculations
Similar post marks or franking on bid envelopes
Parts of bids missing from higher bids e.g. bill of quantities
False bids “cover-pricing”/Non-compete agreements/bid suppression/Geographic or customer allocation
Use of sub-contractors to exchange commercially sensitive data

12. Managing dawn raids by the CCPC
Immediately contact co-ordinator
Check inspectors’ authorisation and identification cards and take copies
CCPC Inspectors are unlikely to wait for lawyers – never stop them.
CCPC inspectors may use force
Record everything said, done and copied/seized
Take copies of originals seized and a copy of copies (incl. hard-drives)
Keep a record of all documents accessed by the inspectors
Inspectors may not take external lawyers correspondence (privilege)

13. Collusive Bidding in Ireland – understanding the legal requirements
CMG Conference – 3 December 2015
Speaker: Alan McCarthy, Partner, A&L Goodbody