French Competition Authority Overturns Its Decision-Making Practice: Coordination Between Subsidiaries in Calls for Tenders Is No Longer Anti-Competitive

Kramer Levin Naftalis & Frankel LLP

According to the decision-making practice of the French Competition Authority (FCA), the coordination between subsidiaries of the same group when submitting coordinated but apparently independent offers in public tenders was traditionally considered collusive bidding, falling under the prohibition of anti-competitive practices by the FCA (i.e., decision 08-D-29 of Dec. 3, 2008, and decision 03-D-07 of Feb. 4, 2003).

This approach became contradictory to EU case law following the EU Court of Justice judgment of May 17, 2018, Ecoservices projektai in the “Specializuotas transportas” case (C-531/16).

The EU Court of Justice ruled, for the first time, that Article 101 of the Treaty on the Functioning of the EU does not apply to circumstances in which two separate and apparently competing bids are submitted by entities controlled by the same parent company, as subsidiaries of the same group are to be considered as a single undertaking under EU competition rules.

The FCA’s decision 20-D-19 of Nov. 25, 2020 applies this new EU case law.

In this case, three subsidiaries (Dhumeaux, Mondial Viande Service and Vianov) almost entirely controlled by the Ovimpex group had submitted separate bids in public tenders launched by France AgriMer between 2013 and 2016. Although apparently separate and competing, the bids had been jointly prepared by the companies involved in the proceeding initiated by the French Competition Authority.

Applying EU case law, the FCA qualified the coordination as the conduct of one single economic entity, which does not fall under the prohibition of anti-competitive practices, and dismissed the case.

However, the coordination of bids might distort the outcome of the tender by misleading the public purchaser on the intensity of competition and might be sanctioned according to public procurement law.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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