The Spanish Competition Authority ("CNMC") has fined 15 companies and 14 directors which participated in three cartels for breaching EU and Spanish antitrust rules by distributing contracts among themselves for the provision of certain services in the rail sector.
| what you need to know - practical takeaways |
- The case reflects the CNMC's continued focus on stamping out bid-rigging conduct, following on from the creation of specialised new economic intelligence unit which conducts market screening activities and targets in particular potential bid-rigging in public procurement activities.
- The CNMC has used, for the first time, a legal procedure set out in the Public Procurement Law that enables it to ban infringers from participating in public tenders.
- The scope and duration of such ban will be determined by the National Consultancy Board for Administrative Contracting.
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Conduct and fines
The CNMC concluded that the companies constituted three different cartels to share contracts tendered by Administrador de Infraestructuras Ferroviarias ("ADIF"), the company responsible for the administration of the infrastructure of Spanish railways:
- one cartel constituted 13 companies that distributed among themselves, during eight years, 24 contracts for the electrification and maintenance of the high-speed railway line for a total value of €837 million. To this end, the companies agreed to create several consortia in the form of Uniones Temporales de Empresas ("UTEs" - temporary, single purposes joint venture vehicles) that, when awarded the contract, shared part of its production and profit margin with the rest of the companies (which submitted their tenders just to simulate competition in the procedure);
- another cartel constituted 10 companies that, during 14 years, adopted agreements to distribute among themselves at least 239 tenders for the electrification of the conventional railway, among which 173 were awarded to them for a total value of €134 million. To this end, the directors of the companies agreed an allocation method by the drawing of the tenders that established the awarding order among them. Then, the "losing" companies were compensated with a 6% of the profit derived from the contract that was shared equally among them; and
- a further cartel constituted two companies, to which a third one joined later, that, during three years, agreed to share public tenders and one private tender for the building, installation and maintenance of electromechanical equipment on high-speed lines for a value of at least €84 million.
The CNMC initiated its investigation after Alstom Transporte submitted a leniency application, for which the CNMC granted immunity from a €8.9 million fine (€8.8 million of which was attributable to the company and €155,700 of which to the directors involved in the infringement). In addition, the CNMC granted a 45% reduction in Siemens' fine for cooperating with the CNMC (which reduced its fine from €16.8 million to €9.24 million).
Bans from participating in public tenders
In addition to fining the companies and their directors directly involved in the infringement, the authority, for the first time, has used a legal procedure set out in the Public Procurement Law (Law 9/2017) and introduced in 2015 to ban the infringers (with the exception of Alstom and Siemens, who cooperated with the authority under the leniency program) from submitting public tenders. However, the CNMC did not determine the scope and duration of the ban, which will be determined by the National Consultancy Board for Administrative Contracting (as provided for by the Public Procurement Law).
This case illustrates one of the main priorities for the CNMC since 2016: addressing collusion in public tenders. Since then, the CNMC has addressed behaviour in response to tenders in recent decisions. However, this is the first time that it has but this one is of great importance as it imposed fines on directors and a ban on participation in public tenders.
