On 14 January 2021, the Court of Justice delivered a preliminary ruling in which it set out guidance on when an anticompetitive agreement on submitting tenders in the context of a procurement procedure is deemed to have ceased. This ruling has important implications for the application of limitation periods for fines imposed by national competition authorities.
On 4 June 2007, the Finnish undertaking Eltel Network Oy (Eltel) submitted a tender for the construction of a high-voltage transmission line for the owner of the network in Finland (Fingrid Oyj). Eltel was awarded the construction contract, which was signed on 19 June 2007.
Following an investigation, the Finnish Competition and Consumer Authority found that Eltel and one of its competitors, Empower, had colluded prior to the submission of the tender. The cartel operated from 2004 to 2011 and consisted of fixing prices and profit margins as well as allocating design and construction works relating to transmission lines in Finland. In view of these findings, on 31 October 2014 the Authority proposed to the Finnish Market Court to find Eltel liable and to impose a fine of EUR 35 million.
The Finnish Market Court however dismissed this application on the ground that the five-year limitation period set by Finnish law had expired. On appeal, the Finnish Supreme Administrative Court stayed proceedings and asked the Court of Justice how to determine when a collusion under Article 101(1) TFEU is deemed to have ceased where it consisted of a bid-rigging cartel.
In its ruling, the European Court of Justice drew a distinction between the restrictive effects of the cartel on competition – which deprived the contracting authority from the possibility of obtaining the goods, services or works under normal market conditions – and the wider adverse economic effects on other economic operators. According to the Court, and in accordance with the opinion of Advocate General Pitruzzela, the duration of the alleged infringement must cover the entire period during which the tenderer implemented the anticompetitive agreement.
This means that the infringement of Article 101(1) TFEU must be regarded as having ended on the date on which the unlawful tender was submitted, or if the tender is successful, on which the contract has been signed with the contracting authority. Indeed, the Court observed that where there is a manipulation of a tendering procedure, the restrictive effects of the cartel on competition disappear, in principle, when the essential characteristics of the contracts have been definitively established by the conclusion of a contract. Only then is the contracting authority definitely deprived of the opportunity to obtain the goods, works or services under normal market conditions.
In view of this finding, the Court concluded that Eltel’s participation in the bid-rigging cartel was deemed to have come to an end on 17 June 2007. The Authority’s proposal on 31 October 2014 to impose a fine on Eltel thus came too late.
In its decision, the Court also made clear that the solution thus adopted only applies to the penalties resulting from a breach of Article 101(1) TFEU. Therefore, it does not prevent other economic operators who have suffered damage – in particular through the application of downstream higher electricity distribution tariffs – from seeking compensation before national courts.
Please contact Pierre de Bandt or Jeroen Dewispelaere for further information about this case and/or for general legal advice relating to competition law.