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Johanna Bjurling, Johan Sahl, Aug 12, 2014
How do you give accurate, simple, and useful guidance in an area of competition law where the knee-jerk answer to most questions tends to be: “It depends”? This was the challenge the Swedish Competition Authority set itself when we decided to develop a web-based interactive guidance for companies wishing to collaborate in procurement. Our primary focus group was small and medium sized enterprises with none or little previous experience in competition law. A few months later the project was completed and launched in tandem with a road-show at various industry organizations.
The purpose of the guidance was to offer clearer guidance on when, and in what circumstances, companies are allowed to cooperate when tendering for contracts in a procurement context. Perhaps due to the sparse case law on the subject both in Sweden and at EU level, the SCA had seen signs that companies as well as purchasers often have a hard time identifying where the line is drawn between competitive and anticompetitive cooperation. As a consequence, the SCA has had a number of cases over the last couple of years concerning potentially illegal cooperation, particularly in the context of public procurement. We felt there was a need to couple that enforcement work with more preventive outreach work, assisting companies in this matter at an earlier stage.
So, why guidance on this particular topic, among the countless grey areas of competition law? First of all it is our view that if smaller companies would collaborate in procurements to a greater extent, this could have a positive and strengthening effect on competition. Each year municipalities, county councils, and the government in Sweden procure goods and services for over SEK 500 billion (approximately EUR 55 billion). A large part of the private sector also chooses to procure by some form of bidding procedure. Often large and established companies have an advantage when competing for these contracts. In larger procurements, only a few players in the market may have the capacity to bid independently. Cooperation between smaller companies could be a way for them to submit tenders in procurements and thereby strengthen competition throughout markets.
Secondly, SMEs are less likely to have access to in-house or even external competition law expertise. This may lead to inadvertent breaches of the rules in some instances, but also to over-prudence in other cases. Providing clearer guidelines could therefore encourage pro-competitive collaboration in sectors where SMEs could compete with larger businesses. The purpose of the initiative is to encourage cooperation, which means more competition for contracts while discouraging collaboration reducing such competition.