CMS Expert Guide: Right Bidding vs Bid Rigging in Romania

(i) The bidding process is regulated by the public procurement legislation, depending on the whether the subject matter of the award is a public procurement contract, a public works or services concessions contract or a public-private partnership contract. This legislation includes:

• Law no. 98/2016 on public procurement;
• Law no. 99/2016 on public procurement in the utilities sector;
• Law no. 100/2016 on concessions contracts; and
• Government Emergency Ordinance no 39/2018 on public-private partnerships.

Additionally, the Romanian Administrative Code as approved by Government Emergency Ordinance no. 57/2019 provides for bidding procedures for the award of public goods concessions contracts and sales of goods in the private ownership of public authorities.

(ii) Bid rigging is prohibited by Article 5 letter f) of the Romanian Competition Law no. 21/1996 (“Romanian Competition Law”) which prohibits the participation in a concerted manner with rigged bids in a tender or in any other form of bidding competition. Romanian Competition Law also incriminates acts by individuals with management powers (e.g. directors, legal representatives) who were intentionally involved in bid rigging. Additionally, the Romanian Criminal Code incriminates the offence of removing, by coercion or bribery, a participant from a public tender or collusion between participants to distort the tender price.

Bid rigging prohibited by Article 5 letter f) of Romanian Competition Law is sanctioned with a fine of up 10% of the global turnover of the infringer registered in the financial year before the infringement. Romanian Competition Law also provides that individuals with management powers (e.g. directors, legal representatives) who were intentionally involved in bid rigging are sanctioned with imprisonment from six months to five years or a fine and prohibition of certain rights. The contract awarded through bid rigging is then considered null and void.

Additionally, under the Romanian Criminal Code an individual and/or company which committed the offence of misappropriation of public tenders defined as removing, by coercion or corruption, a participant from a public tender or collusion between participants to distort the tender price, is punishable by imprisonment for one to five years or a fine equivalent applicable to legal entities.

Under the public procurement legal framework, companies previously involved in bid rigging which is ascertained by a final decision of the judicial courts or an administrative authority, for three years as of the respective conviction decision can be excluded from a public procurement award procedures, such act being considered grave professional misconduct. The contracting authority in a public award procedure has the right to exclude a bidder from the procedure at any time before the award, throughout the evaluation of the offers submitted by the bidders. This sanction will apply unless the bidder can provide evidence of rehabilitation within the meaning of the Romanian public procurement laws, which may include evidence that the bidder previously cooperated with the RCC during the investigation and admitted its conduct or the bidder follows a competition compliance programme and implements various instruments to prevent anti-competitive conduct in future. The contracting authority is free to assess the evidence in accordance with the principles of proportionality and may rely on the RCC’s opinion in this process.

Under Romanian Competition Law, sanctions are enforced by the Romanian Competition Council (the “RCC”) as the national competition authority vested with powers in this respect in Romania. Criminal offences are investigated by the Romanian prosecutor office and sanctions enforced by decision of the Romanian criminal courts.

Yes. Under the public procurement legal framework, companies previously involved in bid rigging (either by grave fault or intent) which is ascertained by final decision of the judicial courts or an administrative authority, can be excluded from a public procurement award procedure for three years as of the respective conviction decision, unless they can evidence rehabilitation within the meaning of the law. The RCC publishes a list of economic operators involved in bid rigging which have been fined by decision of the RCC, as well as information on whether the respective economic operator implements a self-cleaning programme, has recognised the anti-competitive conduct or has previously applied for leniency (the latest list is available here: blacklist-18012023.pdf (competition.ro) (in Romanian).

The law does not require that the act of bid rigging be ascertained in a final decision or court judgment. Therefore, a bidder runs the risk that the contracting authority could exclude a bidder having been convicted of bid rigging in the first instance, even if the NCA decision is challenged before a court. However, based on the principle of proportionality, the bidder can argue in view of its challenge of the NCA decision that such exclusion decision is disproportionate.

A previously convicted bidder may be exempted from the tender ban before the expiry of the full three years if it provides evidence of rehabilitation, such as the implementation of self-cleaning programmes, decisions issued by the RCC in the previous three years finding the application of a more favourable sanctioning regime for the bidder (e.g. as a result of the application of the leniency policy or of the procedure for admission of the anti-competitive act), and instruments at the disposal of the RCC, which imply effective cooperation of bidder with the RCC.

Yes. The RCC, either individually or in cooperation with the Romanian Authority on Public Procurement (ANAP), has issued the following relevant guidance:

• Guidelines for combatting bid rigging: ghid_practici_anticoncurentiale_licitatii.pdf (consiliulconcurentei.ro) (in Romanian);
• Guidelines for the division of a public contract into lots: Ghid-lotizare.pdf (consiliulconcurentei.ro) (in Romanian);
• Guidelines for lawful joint bidding/consortia in tender processes: https://www.consiliulconcurentei.ro/uploads/docs/items/bucket11/id11008/ghid20042016.pdf  (in Romanian);
• Guidance on evidence for rehabilitation that a bidder can submit in an award procedure: Opinie-comuna-CC-ANAP.pdf (competition.ro) (in Romanian).

2019: four new investigations into bid rigging and three fines

Investigations: in addition to fines and non-infringement decisions, in 2019 the RCC initiated four investigations concerning possible bid rigging of tenders as follows:

• tender procedures for the purchase of rollers and roller rings for coal conveyor belts;
• 11 tender procedures organised between 2017 and 2019 by several territorial administrative units in Mures county concerning the services of collection, transport and storage of household waste;
• one public tender organised by the Municipality of Brasov, in the year 2018, for the delegation by concession of the management of the service, organisation and operation of public pay car parks in the public domain of the city;
• procedures for the recovery of standing timber organised by Bacău Forestry Directorate.

Fines: in 2019, the RCC completed three investigations with findings of infringements of competition law in tender procedures, with fines totalling about RON 8.7 million being imposed (approximately EUR 1.8 million) on ten companies, of which three expressly admitted anti-competitive behaviour. The investigations concerned:

• public procurement procedures organised by the National Company of Administration of Road Infrastructure in Romania, to award the provision of routine winter maintenance services on national roads and motorways managed by the Regional Directorate of Roads and Bridges Cluj, for 2013 to 2015;
• three public procurement procedures for road signalling equipment, organised in 2014 to 2016 by the National Company of Highways and National Roads of Romania SA, currently the National Company of Administration of Road Infrastructure in Romania;
• a public procurement procedure organised in 2017 by the Hunedoara Forestry Directorate, as contracting authority, to award a contract for security services.

2020: three new investigations into bid rigging and four fines.

Investigations: in 2020, the RCC initiated three new investigations into possible bid rigging, representing 23% of the total investigations initiated on possible competition law infringements. Another investigation was closed with no findings of competition law infringement (concerning the security services market in the Romgaz Târgu Mureș tendering procedure).

Fines: in 2020, out of the total number of investigations the RCC completed, seven investigations (54%) concerned anti-competitive bid-rigging or bid-facilitation, of which, in more than half of cases, competition law violations were found, with fines totalling around RON 167 million (EUR 35 million) imposed on 40 companies, of which 19 expressly admitted to the anti-competitive conduct.

2021: one new investigation and one fine.

Investigation: in 2021 the RCC initiated one investigation into possible anti-competitive agreements among companies that participated as bidders in the procurement procedure for the project Hub Services (Electronic Service Delivery Centre) at the Ministry of Internal Affairs (MAI). The investigation was launched after the authority received a complaint from one of the bidders about possible anti-competitive practices in a tender organised by the Romanian Ministry of Internal Affairs. Allegations concern 12 companies accused of possible coordination for the direct or indirect fixing of sales or purchase prices with the aim of preventing, restricting or distorting competition on affected markets including construction works, installation services and communication services.

Fines: the RCC fined six companies a total of RON 2.52 million (approximately EUR 521,000) for rigging tenders organised by Societatea Complexul Energetic Oltenia and Centrala Electrică de Termoficare Govora, between April 2017 and February 2019, for the purchase of rollers and garlands of rollers. Following an investigation, the RCC found that the six companies formed partnerships to participate with a joint bid in 12 public procurement procedures organised by Complexul Energetic Oltenia SA and Centrala Electrică de Termoficare Govora SA between April 2017 and February 2019.

2022: one fine.

Fine: three insurance companies and one insurance broker were fined RON 15 million (EUR 3 million) for agreeing to share large customers in four tenders organised by each public customer (Romatsa, National Company „Aeroporturi București” - CNAB and Romaero).

No official yearly statistics have been released, however we estimate the following based on annual reports published by the Competition Council:

2019: 57% (based on completed investigations: four bid-rigging investigations out of seven completed investigations into horizontal agreements);

2020: 63% (based on completed investigations: seven bid rigging investigations out of 11 completed investigations into horizontal agreements);

2021: 16% (based on completed investigations: one bid rigging investigation out of six completed investigations into horizontal agreements);

2022: 12% (based on completed investigation: one bid rigging investigation out of eight completed investigations into horizontal agreements).

2019: RON 8.7 million (EUR 1.8 million)

2020: RON 167 million (EUR 35 million)

2021: RON 2.52 million (EUR 521,000)

2022: RON 15 million (EUR 3 million)

Yes, bid rigging cases have quite often been completed or developed by the RCC based on information provided by leniency applicants (in one case, the RCC was able to extend an initial investigation following a complaint by a bid participant, based on the leniency application made by a competitor bidder in the investigated tenders; moreover, based on the leniency application the RCC was able to extend the investigation and findings of infringements to other tenders in which the same bidders had also participated over an extended period of time, eventually also fining the initial complainant who did not disclose its own involvement in bid rigging).

Yes. Bid rigging is prohibited as a separate criminal offence under the Romanian Criminal Code. Specifically, the criminal offence of misappropriation of public tenders is defined as the act of eliminating, by constraints or corruption, a participant from a public tender or the understanding between participants to fix tender prices is sanctioned with imprisonment from one to five years.

In addition, Romanian Competition Law includes a provision referring to individuals’ criminal liability for anti-trust infringements. Accordingly, a director, manager, administrator, legal representative or other person exercising any other form of management position in an undertaking who intentionally conceives or organises an anti-competitive practice provided for in Article 5(1) of the Romanian Competition Law (which prohibits anti-competitive horizontal agreements and bid rigging), and which does not benefit from an exemption under competition rules, constitutes a criminal offence. This offence is punishable with imprisonment for six months to five years, or a fine, and a prohibition of rights.

Yes. In addition to new investigations opened in 2022 (which are expected to continue in 2023), the RCC has announced that it will continue to allocate significant resources to investigations and tracking down bid rigging cases. Clearly, the past three years reflect bid rigging as a key priority policy of the RCC in Romania.

A broad range of sectors have been affected by bid-rigging investigations over the last ten years, including collection, transport and storage of household waste; car park services; forestry; winter maintenance services on national roads and motorways; road signalling; security services; construction works; installation services and communication services; and insurance services.

The RCC is one of the leading enforcement competition authorities in bid rigging cases in the EU and pursues this priority both in terms of investigations conducted as well as policy and regulation. On the latter points, we note that the Competition Council together with the Romanian Public Procurement Authority have issued guidance on both participation conditions for consortia in public procurement procedures, as well as on the rehabilitation of companies previously sanctioned for unlawful activities, in order to enable their participation in public procurement procedures, and guidance on detection of anti-competitive behaviour in public procurement procedures.

In the specific context of the COVID-19 pandemic, the Competition Council announced that it will closely monitor markets and prices in order to identify and sanction those undertakings which unlawfully benefitted by these circumstances, particularly in the case of certain tenders where products or services were purchased at exceedingly high prices. One can reasonably expect that additional investigations and fines for bid rigging will be announced in the course of this year.