Self-assessment of the legality of joint bids – a tricky task for the courts

Joint bidding is often an attractive alternative for companies who want to participate in a tender procedure; either to increase their chances of winning the public contract, or to be able to participate in the tender procedure at all. It is nevertheless important for companies to remember that a bidding cooperation might infringe competition law. It is for the bidding companies to carefully self-assess the legality of a joint bid before entering into the cooperation. An incorrect assessment could have severe consequences in the form of nullity, exposure to hefty fines and damages and disqualification from future public tenders. Yet the assessment is far from straight-forward. In particular, competition authorities in the Nordics tend to pursue joint bids of actual or potential competitors as anti-competitive by object. This is a problematic development, since it may result in companies refraining from engaging in benign and pro-competitive joint bids.

But when are joint bids restrictive of competition by object? In this article, we examine recent judgments from courts in all three Scandinavian countries as well as a preliminary ruling of the EFTA court. These rulings are somewhat diverging and will puzzle self-assessing companies contemplating whether or not to submit a joint bid. In addition, two of the judgments stretch the test for when companies are considered ‘actual or potential competitors’ which goes beyond the bidding companies’ perception of their possibility to obtain capacity to perform a tendered contract individually. Consequently, the self-assessment test has become critically complex. We therefore suggest a different approach to how joint bidding should be dealt with, which we believe would benefit all parties involved.

You can find the full article attached.

This article first appeared in the November 2017 issue of the Newsletter of the Antitrust Committee of the Legal Practice Division of the International Bar Association (Vol 30, No 2), and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.

Author

Kristian Hugmark 
Partner
Stockholm
Lars Johansson 
Senior Advisor
Stockholm