Competition Law

• EU
  • Treaty on the Functioning of the European Union

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    • Article 101
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      1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:

      (a) directly or indirectly fix purchase or selling prices or any other trading conditions;

      (b) limit or control production, markets, technical development, or investment;

      (c) share markets or sources of supply;

      (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

      (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

      2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.

      3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

      – any agreement or category of agreements between undertakings,

      – any decision or category of decisions by associations of undertakings,

      – any concerted practice or category of concerted practices,

      which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

      (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

      (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

    • Article 102
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      Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

      Such abuse may, in particular, consist in:

      (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

      (b) limiting production, markets or technical development to the prejudice of consumers;

      (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

      (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

    • Article 106
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      1. In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaties, in particular to those rules provided for in Article 18 and Articles 101 to 109.

      2. Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in the Treaties, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Union.

      3. The Commission shall ensure the application of the provisions of this Article and shall, where necessary, address appropriate directives or decisions to Member States.

• Ireland
  • Competition Acts 2002

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    • Section 4
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      (1) Subject to the provisions of this section, all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void, including in particular, without prejudice to the generality of this subsection, those which—

      (a) directly or indirectly fix purchase or selling prices or any other trading conditions,

      (b) limit or control production, markets, technical development or investment,

      (c) share markets or sources of supply,

      (d) apply dissimilar conditions to equivalent transactions with other trading parties thereby placing them at a competitive disadvantage,

      (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the F7[subject of such contracts, or]

      F8[(f) are concerned with bid-rigging.]

      (2) An agreement, decision or concerted practice shall not be prohibited under subsection (1) if it complies with the conditions referred to in subsection (5) or falls within a category of agreements, decisions, or concerted practices the subject of a declaration for the time being in force under subsection (3).

      F9[(3) Either competent authority may in writing declare that in its opinion a specified category of agreements, decisions or concerted practices complies with the conditions referred to in subsection (5), but only with the concurrence of the other competent authority. If the competent authority that made the declaration later forms the opinion that the category no longer complies with those conditions, it may revoke the declaration, but only with the concurrence of the other competent authority.]

      (4) F9[The competent authority] shall publish, in such manner as it thinks fit, notice of the making of a declaration under subsection (3), and of any revocation by it of such a declaration.

      (5) The conditions mentioned in subsections (2) and (3) are that the agreement, decision or concerted practice or category of agreement, decision or concerted practice, having regard to all relevant market conditions, contributes to improving the production or distribution of goods or provision of services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit and does not—

      (a) impose on the undertakings concerned terms which are not indispensable to the attainment of those objectives,

      (b) afford undertakings the possibility of eliminating competition in respect of a substantial part of the products or services in question.

      (6) The prohibition in subsection (1) shall not prevent the court, in exercising any jurisdiction conferred on it by this Act concerning an agreement, decision or concerted practice which contravenes that prohibition and which creates or, but for this Act, would have created legal relations between the parties thereto, from applying, where appropriate, any relevant rules of law as to the severance of those terms of that agreement, decision or concerted practice which contravene that prohibition from those which do not.

      (7) In respect of an agreement, decision or concerted practice such as is referred to in subsection (6) a court of competent jurisdiction may make such order as to recovery, restitution or otherwise between the parties to such agreement, decision or concerted practice as may in all the circumstances seem just, having regard in particular to any consideration or benefit given or received by such parties on foot thereof.

      (8) The putting into effect of a merger or acquisition in accordance with the provisions of Part 3 of this Act, together with any arrangements constituting restrictions which are directly related and necessary to the implementation of the merger or acquisition and are referred to in the notification of the merger or acquisition under subsection (1) or (3) of section 18, shall not be prohibited under subsection (1).

      (9) For the avoidance of doubt, references in this Part of this Act to the parties to an agreement, decision or concerted practice of a kind referred to in subsection (1) include references to one or more of the parties to such an agreement, decision or concerted practice.

      (10) Subsection (9) is without prejudice to section 11(a) of the Interpretation Act, 1937.

      F8[(11) In this section—

      “bid-rigging” means the formation or continuation of an agreement or concerted practice between undertakings concerning or relating to their participation or non-participation in a relevant bidding process without informing the person requesting bids or tenders, and without prejudice to the generality of the foregoing includes the following:

      (a) an agreement whereby one or more undertakings agree not to submit a bid or tender in a relevant bidding process, or agree to withdraw a bid or tender submitted as part of such a process;

      (b) an agreement whereby one or more undertakings submit a bid or tender, as part of a relevant bidding process, on terms, or subject to conditions, arrived at in accordance with the agreement or concerted practice between such undertakings;

      (c) collusive tendering;

      “relevant bidding process” means a process by which bids or tenders to supply a product or service, to produce a product or to enter into a concession contract are requested.]

    • Section 5
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      (1) Any abuse by one or more undertakings of a dominant position in trade for any goods or services in the State or in any part of the State is prohibited.

      (2) Without prejudice to the generality of subsection (1), such abuse may, in particular, consist in—

      (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions,

      (b) limiting production, markets or technical development to the prejudice of consumers,

      (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage,

      (d) making the conclusion of contracts subject to the acceptance by other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contracts.

      (3) The putting into effect of a merger or acquisition in accordance with the provisions of Part 3 of this Act, together with any arrangements constituting restrictions which are directly related and necessary to the implementation of the merger or acquisition and are referred to in the notification of the merger or acquisition under subsection (1) or (3) of section 18, shall not be prohibited under subsection (1).

  • Bid-Rigging - What You Need to Know

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    CCPC Guidance

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• UK
  • Competition Act 1998

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    • Section 2 Agreements etc. preventing, restricting or distorting competition
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      (1) Subject to section 3, agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom and which—

      (a) in the case of agreements, decisions or practices implemented, or intended to be implemented in the United Kingdom, may affect trade in the United Kingdom, or

      (b) in any other case, are likely to have an immediate, substantial and foreseeable effect on trade within the United Kingdom,

      are prohibited unless they are exempt in accordance with the provisions of this Part.]

      (2) Subsection (1) applies, in particular, to agreements, decisions or practices which—

      (a) directly or indirectly fix purchase or selling prices or any other trading conditions;

      (b) limit or control production, markets, technical development or investment;

      (c) share markets or sources of supply;

      (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

      (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

      (3). . .

      (4) Any agreement or decision which is prohibited by subsection (1) is void.

      (5) A provision of this Part which is expressed to apply to, or in relation to, an agreement is to be read as applying equally to, or in relation to, a decision by an association of undertakings or a concerted practice (but with any necessary modifications).

      (6) Subsection (5) does not apply where the context otherwise requires.

      (7) In this section “the United Kingdom” means, in relation to an agreement which operates or is intended to operate only in a part of the United Kingdom, that part.

      (8) The prohibition imposed by subsection (1) is referred to in this Act as “the Chapter I prohibition”.

    • Section 18 Abuse of dominant position
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      (1) Subject to section 19, any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.

      (2) Conduct may, in particular, constitute such an abuse if it consists in—

      (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

      (b) limiting production, markets or technical development to the prejudice of consumers;

      (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

      (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.

      (3) In this section—

      “dominant position” means a dominant position within the United Kingdom; and

      “the United Kingdom” means the United Kingdom or any part of it.

      (4) The prohibition imposed by subsection (1) is referred to in this Act as “the Chapter II prohibition”.

  • Guidance: Bid-Rigging Risk in all Procurement - Practice Note (2024)

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    Guidance of the Government Counter Fraud Profession (incorporating the CMA)

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  • Bid-rigging: guidance for public sector procurers (2014)

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    What is bid-rigging?

    Bid-rigging is when suppliers agree to limit competition in the procurement process, thereby denying the customer a fair price. Bid-rigging agreements can take several forms, such as:

    • bid rotation – where firms agree to take it in turns to submit the lowest bid
    • bid suppression – where one or more firms agree not to bid, or to withdraw their bids
    • cover pricing – bidders arrange for one or more of them to submit an artificially high bid, distorting the procurer’s impression of the competitive price

    Why public sector procurers should care about bid-rigging

    Bid-rigging can cost the taxpayer money and can exclude potentially more efficient competitors from the bidding process.

    It may also reduce suppliers’ incentives to improve quality or innovate.

    How to spot suspicious bidding patterns

    • bids received at the same time or containing similar or unusual wording
    • different bids with identical prices
    • bids containing less detail than expected
    • the likely bidder failing to submit a bid
    • the lowest bidder not taking the contract
    • bids that drop on the entry of a new or infrequent bidder
    • the successful bidder later subcontracting work to a supplier that submitted a higher bid
    • expected discounts suddenly vanishing or other last minute changes
    • suspiciously high bids without logical cost differences (for example, delivery distances)
    • a bidder that betrays discussions with others or has knowledge of previous bids

    What can public sector procurers do to reduce the risks of anti-competitive behaviour?

    • look for suspicious bidding patterns, and inform suppliers that you will be looking
    • consider requiring bidders to sign non-collusion clauses and/or certificates of independent bids
    • avoid tender list management that incentivises firms to bid even if they do not want the work
    • share experience with other public sector procurers

    Bid-rigging can cost the taxpayer money. Stay aware to the possibility that your suppliers are rigging bids and report any suspicious behaviour to the CMA.

    Report a cartel on the Cartels Hotline 020 3738 6888 or email [email protected]

Introduction

The competition rules only apply to “undertakings”, a term of art not defined in the TFEU. The question of what entities are subject to competition law is probably of most relevance in considering whether a contracting authority could itself be subject to competition law. In the great majority of cases, a contracting authority will not be an undertaking, however, there may be cases where the position is either not clear or where because of its operations in a market downstream from its purchasing activities, the contracting authority is an undertaking and therefore subject to competition law. Tenderers will always be undertakings, or at least it is difficult to conceive of a situation where a tenderer would not be an undertaking.

Article 101(1) prohibits anti-competitive agreements “between undertakings”, decisions by “associations of undertakings” and concerted practices (between undertakings). Article 101(1) does not explicitly state that “concerted practices” have to be between undertakings but this is clear from how Article 101 has been interpreted by the CJEU, which has defined a concerted practice as “a form of co-ordination between undertakings” (see, e.g., Cases 48/69 etc. ICI v Commission (“Dyestuffs”) [64]).

The term “undertaking” (also used in Articles 102, 106 and 107) is not defined in the Treaty. The term has been given a wide interpretation by the courts.

An undertaking can be a natural or legal person. The concept is not confined to companies or other corporate bodies; it extends to entities including partnerships, trade associations, professional bodies, agricultural cooperatives and sole traders, among others.

Economic Activity

The key question in determining if an entity qualifies as an undertaking is whether it is engaged in an “economic activity”: “[The] concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed.” (Case C‑41/90 Höfner & Elser v Macrotron GmbH [21]).

To qualify as an economic activity, the entity must be involved in providing goods or services; it is not sufficient that it acts only as a purchaser: “An economic activity is one which consists in offering goods or services on a given market and which could, at least in principle, be carried on by a private actor in order to make profits.” (Case C‑475/99 Ambulanz Glöckner v Landkreis Südwestpfalz, opinion of Advocate General Jacobs, [67]).

Given that almost every activity can, in principle, be carried out by a private actor, it is also relevant to consider whether in fact the activity is carried out in conditions of competition on a market; it is apparent from some of its decisions on the meaning of an undertaking that the Court has placed reliance on this factor (e.g., the opinion of Advocate General Maduro in Case C‑205/03 P Federación Española de Empresas de Tecnología Sanitaria (FENIN) v Commission [11–13]).

An entity can constitute an “undertaking” for purposes of EU competition law whether or not it is intended to earn profits (Case 209/78 Van Landewyck and Others v Commission [88]) as such an entity can still be in competition with profit‑making operators (e.g., Case C‑222/04 Ministero dell’Economia e delle Finanze v Cassa di Risparmio di Firenze SpA [123]).

It is also unnecessary that it have legal personality (Case C‑189/02 P Dansk Rørindustri and Others v Commission [113]).

The concept of an undertaking is contextual/functional – an entity may be deemed to be an undertaking in respect of some of its activities, which are economic in nature, but fall outside the scope of an undertaking in respect of other activities (e.g. Case C‑49/07 Motosykletistiki Omospondia Ellados NPID (MOTOE) v Elliniko Dimosio [25]; also, Case T‑128/98 Aéroports de Paris v Commission [108]).

Entities that are linked to the State, including contracting authorities within the meaning of the public procurement rules, can be undertakings if they perform an economic activity. However, entities are not undertakings when they exercise sovereign or administrative functions “that are typically those of a public authority” (Case C‑364/92 SAT Fluggesellschaft v Eurocontrol [30]) or can be classed as “a task in the public interest which forms part of the essential functions of the State” (Case C‑343/95 Cali & Figli v SPEG [22]).

In finding that certain activities were not of an economic nature and that entities were not undertakings, the Union courts have focused in some cases on the fact that the function fulfilled by the activity is a “social” one or is based on the principle of “solidarity” (defined by one Advocate General as “the inherently uncommercial act of involuntary subsidisation of one social group by another”) (Case C‑70/95 Sodemare SA v Regione Lombardia [29]). This focus has allowed entities operating sickness funds (Joined Cases C‑264/01, C‑306/01, C‑354/01 and C‑355/01 AOK Bundesverband v Ichthyol‑Gesellschaft Cordes, Hermani & Co.) and compulsory work insurance schemes (Case C‑218/00 Cisal) as well as health insurers operating on the basis of a solidarity principle to fall outside the Treaty’s competition rules (Cases C‑262/18 P and C‑217/18 P Commission v Dôvera zdravotná poist’ovňa, a.s. at [32]).

The courts have also considered the overall nature, aim and rules to which the activities in question are subject, finding, for example, that an entity carrying out air traffic control with the collection of charges was not an undertaking: taken as a whole, its activities were connected with the exercise of powers relating to the control and supervision of air space which are typically those of a public authority and not of an economic nature justifying the application of the Treaty rules of competition (Case C‑364/92 SAT Fluggesellschaft v Eurocontrol [30]; see also Sánchez Graells & Anchustegui, “Revisiting the concept of undertaking from a public procurement law perspective – a discussion on EasyPay and Finance Engineering” [2016] ECLR 93, discussing para 40 of Case C‑185/14 EasyPay AD and Finance Engineering AD v DSK Bank AD).

Ultimately, whether an activity has an economic nature will depend on the surrounding circumstances and

The approach to interpreting the concept of an undertaking has been “functional”. The focus should be on the activities in which the entity is engaged. The notion of an undertaking is “a relative concept in the sense that a given entity might be regarded as an undertaking for one part of its activities while the rest fall outside the competition rules” (Case C‑475/99 Ambulanz Glöckner v Landkreis Südwestpfalz, opinion of Advocate General Jacobs, [72]).

This functional approach can raise difficult questions. What if an entity exercises public powers that have an impact on a market on which it participates? Is the entity an undertaking when exercising its regulatory functions?

In MOTOE, the Court of Justice held that while some of the activities of the Automobile and Touring Club of Greece (ELPA) fell within the exercise of public authority (it had a power of authorisation for motorcycling events), this did not prevent it from being considered an undertaking in respect of the remainder of its activities. ELPA was an undertaking when it engaged in the organisation and commercial exploitation of motorcycling events. The fact that ELPA also had the function of giving consent to authorisations for those events did not prevent it from being an undertaking when it carried out its commercial activities (Case C‑49/07 MOTOE v Elliniko Dimosio [26]). The Court went on to hold that the power to give those consents could not itself be classified as an economic activity (Case C‑49/07 MOTOE v Elliniko Dimosio [46]). This finding was made in the context of applying Article 106(2), with the Court holding that ELPA was not an undertaking entrusted with a service of general economic interest. Earlier at [43], however, the Court had held that ELPA was, by virtue of the same public power to consent to authorisations for organising motorcycling events, an undertaking which was granted special rights by the Member State within the meaning of Article 106(1). While ELPA could not then be found to be in breach of competition law when it exercised its public powers, the Court held that the Greek rule that enabled ELPA to authorise motorcycling events when it participated in organising such events itself, fell foul of Article 102 in conjunction with Article 106 (Case C‑49/07 MOTOE v Elliniko Dimosio [48–53]).

In some cases it may not be possible to separate one activity from the core exercise of public powers carried out by the entity. In SELEX, the Court of Justice considered whether Eurocontrol, an agency with tasks including airspace management and the development of air safety, was an undertaking with respect to some of its activities. The General Court had held that the provision by Eurocontrol of assistance to national administrations (for example, by drafting contract documents) was separable from its core public functions as such assistance had only an indirect relationship with air safety. As this assistance constituted an offer of services on the market for advice, it was held by the General Court to be an economic activity (Case T‑155/04 SELEX Sistemi Integrati SpA v Commission). This separation of Eurocontrol’s activities was rejected by the Court of Justice which found that the provision of assistance was “closely linked” to Eurocontrol’s public task of technical standardisation with a view to achieving air safety and so it was “connected” with the exercise of its public powers (Case C‑113/07 P SELEX Sistemi Integrati SpA v Commission [76]). It was not necessary to show that the provision of assistance was “essential or indispensable” to ensure air navigation safety; what mattered was that the activity was “connected” with Eurocontrol’s exercise of public powers (Case C‑113/07 P SELEX Sistemi Integrati SpA v Commission [79]).

In Panda, the Irish High Court found that in exercising public powers to vary a waste management plan, four local authorities were acting as undertakings. The local authorities were also active in the market for the collection of household waste, in which context they were clearly acting as undertakings. The decision to vary the plan was aimed at affecting that market directly. McKechnie J held: “In those circumstances it is clear that the Variation is of an economic, rather than of an administrative, nature. It seeks to substantially reorder the market as it currently exists. Were the respondents exclusively involved in the regulation of the waste market, e.g. merely imposing charges or conditions on licences and/or overseeing the market for compliance, they would not be undertakings” (Nurendale Ltd t/a Panda Waste Services v Dublin City Council [2009] IEHC 588 [63]).

In other words, where a public body makes a regulatory decision that directly affects the commercial dynamics of the market in which it operates as an undertaking, the exercise of the regulatory power itself will constitute an economic activity.

Offering Goods/Services is the Key Activity; FENIN Case

The act of offering goods or services is what is significant in determining whether an activity is of an economic nature; merely purchasing goods or services is not enough to make it an economic activity.

This was made clear in the FENIN case. FENIN was an association representing suppliers of medical equipment to Spanish hospitals. It complained to the Commission that a number of public management bodies, which ran the Spanish health system and purchased medical equipment, were abusing their dominant position by systematically making late payments. The Commission dismissed the complaint, holding that the management bodies were not “undertakings” and so outside the scope of competition law. That finding was upheld by the General Court (Case T‑319/99 FENIN v Commission) and, on appeal, by the Court of Justice (Case C‑205/03 P Federación Española de Empresas de Tecnología Sanitaria (FENIN) v Commission).

FENIN argued first that the purchasing activity was itself an economic activity which could be dissociated from the service of free healthcare provision which the management bodies subsequently supplied. This argument was rejected, the Court of Justice noting: “[It] is the activity consisting in offering goods and services on a given market that is the characteristic feature of an economic activity. The Court of First Instance rightly deduced … that there is no need to dissociate the activity of purchasing goods from the subsequent use to which they are put in order to determine the nature of that purchasing activity, and that the nature of the purchasing activity must be determined according to whether or not the subsequent use of the purchased goods amounts to an economic activity” (Case C‑205/03 P FENIN v Commission [25]–[26]).

As the Spanish health system was funded from social security and provided free services, it was not engaged in economic activity when it provided those services, so its purchasing activities could not be regarded as economic activity either. FENIN’s second argument, made in the alternative, that the provision of medical treatment was itself economic in nature (the Spanish medical system would have charged certain persons for medical treatment), was dismissed outright as being made out of time and so was not addressed by the Court.

The Court of Justice’s FENIN decision was notable for its brevity and absence of any detailed reasoning. The position adopted is very restrictive and should ensure that a great many contracting authorities are not subject to the competition rules, in particular where they are only engaged in purchasing goods or services and not active in supplying those goods or services on a market. The decision can be contrasted with the earlier approach of the UK Competition Appeal Tribunal (the “CAT”) in BetterCare. In that case, the CAT had to consider whether two Northern Irish health trusts were undertakings for purposes of the Competition Act 1998 when they ran residential care homes and contracted out the provision of social care to private companies (they were accused of abusing a dominant position). The CAT concluded that the trusts were undertakings both in the purchasing of services from BetterCare and in the provision of their own statutory homes. The CAT took the view that the definition of “economic activity” as established by the case law of the Court of Justice was not exhaustive and, referring to the opinion of Advocate General Jacobs in Case C‑218/00 Cisal di Battistello Venanzio & C. Sas v INAIL (as cited in FENIN [71]), it suggested a key consideration was whether the entity was “in a position to generate the effects which the competition rules seek to prevent” (see BetterCare Group Ltd v Director General of Fair Trading [2002] CAT 7).

It went on to discuss how the competition rules apply not only to suppliers but also to purchasers of goods and services and that where a buyer has significant market power – e.g. where it has a monopsony – it is capable of abusing a dominant position through its purchasing practices alone. This approach arguably sits better with the wording of the competition rules themselves – for example, Article 102 mentions the imposition of “unfair purchase or selling prices” – than the more restrictive approach of FENIN (for discussion of FENIN and BetterCare, see, e.g., Skilbeck, “The Circumstances in which a Public Body may be regarded as an ‘Undertaking’ and thus subject to the Competition Act 1998 solely because of its Function as a Purchaser of Particular Goods or Services: Bettercare Group Limited v The Director General Of Fair Trading” (2003) 12 Public Procurement Law Review NA71; Kresalberger, “FENIN: Immunity from Competition Law Attack for Public Buyers” (2006) 15 Public Procurement Law Review NA214; Munro, “Competition Law and Public Procurement: Two Sides of the Same Coin?” (2006) 15 Public Procurement Law Review 352; Olykke, “How does the Court of Justice of the European Union pursue competition concerns in a public procurement context?” (2011) 10 Public Procurement Law Review 93; Office of Fair Trading, OFT 1389, Public Bodies and competition law (December 2011); and Sánchez Graells & Anchustegui, “Revisiting the concept of undertaking from a public procurement law perspective – a discussion on EasyPay and Finance Engineering” [2016] European Competition Law Review 93).

One question that FENIN did not answer is how a contracting authority is to be treated where it purchases goods and then uses them partly for a non‑economic purpose and partly for an economic purpose. An example might be a health authority that purchases medical equipment that is used to treat both public patients (incurring no charge) and private patients (who pay for the service). Does the part‑provision of services to the private patients make the authority an undertaking for competition law purposes when it purchases the medical equipment? Does it depend on what proportion of the authority’s service provision is economic? The answer to these questions is, at present, unclear (see Arrowsmith, The Law of Public and Utilities Procurement, Vol. 1, 3rd ed (2014), para 4‑111).

Finally, it should be pointed out that the term “undertaking” is also used in Irish competition law and is actually defined in Section 3(1) of the Competition Act 2002 as “a person, being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.” The reference to “for gain” does not require that the entity be profit making. So, a body can be considered an undertaking even if it is a not‑for‑profit, as long as it administers a charge for the products or services it provides (see the decision of the Irish Supreme Court in Competition Authority v O’Regan [2007] 4 IR 737, in which credit unions were held to be undertakings for purposes of the Competition Act 2002, even though they advocated a not‑for‑profit philosophy). Despite the apparent difference in the definition of an undertaking raised by the Irish statutory language, the Irish courts have taken a similar approach to the meaning of “undertaking” in Irish law as the Union courts (see Competition Authority v O’Regan at 760; Lifeline Ambulance Services Ltd v Health Service Executive [2012] IEHC 432, [2012] 4 IR 600; Medicall Ambulance Ltd v Health Service Executive [2011] IEHC 76; [2011] 1 IR 402. See also Competition Authority Enforcement Decision 01/08, Alleged anticompetitive conduct by the Health Service Executive relating to the administration of the Community Drugs Schemes (10.10.2008), finding that in negotiation with pharmacy bodies about the prices of drugs and purchasing pharmacy services from private undertakings, the HSE was not an undertaking as it did not receive payment from patients for drugs dispensed under the scheme and so was not acting “for gain” (para 2.31); and Island Ferries Teoranta v Minister for Communications, Marine and Natural Resources [2015] IESC 95, para 2, where it was conceded that Galway County Council and the Minister were to be treated as undertakings for the purpose of competition law in their provision of harbours for ferries to the Aran Islands).

Conclusion on Undertakings

The question of what entities are subject to the public procurement rules and competition law is somewhat technical and not always clear‑cut.

A question that arises in considering overlaps between the two sets of rules is whether an entity that fulfils the criteria of a body governed by public law will ever qualify as an undertaking for competition law purposes. In reaching the conclusion that the entity is a public law body, it will have been established that it meets needs in the general interest, not of a commercial or industrial character. It might then be thought unlikely that it engages in “economic activity” and that therefore, it falls outside the definition of an undertaking. However, the courts have not made this leap and have not drawn connections that would justify such a finding. It is also apparent from some of the cases discussed earlier that a body governed by public law may still face some competition, which could tend to indicate that it engages in an economic activity and so qualifies as an undertaking. Nevertheless, there are undoubtedly parallels between the two concepts that may be drawn in the future.

Entities held to be undertakings and entities found not to be undertakings for purposes of the competition rules

The following entities have been held not to be undertakings:

• Eurocontrol, an international organisation founded by a number of Member States, which carried out air traffic control with collection of route charges – “tasks in the public interest aimed at contributing to the maintenance and improvement of air navigation safety” (Case C‑364/92 SAT Fluggesellschaft v Eurocontrol).
• Entities managing social security systems subjecting self‑employed persons in non‑agricultural occupations to compulsory social protection – exclusively social function based on the principle of solidarity (Joined Cases C‑159/91 and C‑160/91 Poucet and Pistre v Assurances Générales de France and Cancava).
• A company set up by the public port authority to carry out anti‑pollution surveillance services in the port of Genoa – “task in the public interest which forms part of the essential functions of the State as regards protection of the environment in maritime areas” (Case C‑343/95 Cali & Figli v SPEG).
• Associations of sickness funds, which provided benefits to employees who, according to German law, were obliged to be insured – exclusively social function founded on the principle of solidarity; conclusion not altered by the fact the funds engaged in some competition to attract members (Joined Cases C‑264/01, C‑306/01, C‑354/01 and C‑355/01 AOK Bundesverband v Ichthyol‑Gesellschaft Cordes, Hermani & Co.).
• Entities providing compulsory insurance for work accidents – principle of solidarity (Case C‑218/00 Cisal di Battistello Venanzio & C. Sas v INAIL).
• A municipal authority granting exclusive concessions to undertakers – an administrative public function (Case 30/87 Bodson v Pompes funèbres des régions libérées SA).
• Bodies responsible for the operation of the Spanish national health system – nature of purchasing activity dependent on the use to which goods were put (Case C‑205/03 P FENIN v Commission).
• Non‑profit ELPA, which represented the International Motorcycling Federation in Greece and was vested with certain public powers – its role in the decision‑making process of the public authorities could be distinguished from economic activities engaged in by it, such as organisation and commercialisation of motorcycling events (Case C‑49/07 MOTOE v Elliniko Dimosio).
• Irish Dental Council not an association of undertakings (Kenny v Dental Council [2004] IEHC 29) (cf. Case C‑309/99 Wouters; for criticism of the judgment, see Hogan, “Regulatory Bodies as Associations of Undertakings” (2005) 27 Dublin University Law Journal 329).
• The Health Service Executive when negotiating with the representative bodies of the pharmaceutical industry in Ireland to reduce the ex‑factory price of certain pharmaceutical drugs; and purchasing community pharmacy services from private sector pharmacy undertakings under various schemes for the provision of prescription drugs to the general public. The Competition Authority considered that the HSE was not an undertaking for purposes of Articles 101 or 102 or the Competition Act 2002 (Competition Authority Enforcement Decision 01/08, Alleged anticompetitive conduct by the Health Service Executive relating to the administration of the Community Drugs Schemes (10.10.2008)).

The following entities have been held to be undertakings:

• Members of the Dutch Bar – the fact the profession was regulated did not alter the economic nature of its activities (the case arose out of regulations of the Dutch Bar which prohibited lawyers from practising in full membership with accountants) (Case C‑309/99 Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten).
• Medical specialists – were paid by patients for their services and assumed the financial risks of pursuing their activity (Joined Cases C‑180/98 to C‑184/98 Pavlov and Others v Stichting Pensioenfonds Medische Specialisten).
• A public employment agency – employment procurement not necessarily carried out by public entities: “The fact that employment procurement activities are normally entrusted to public agencies cannot affect the economic nature of such activities. Employment procurement has not always been, and is not necessarily, carried out by public entities. That finding applies in particular to executive recruitment” (Case C‑41/90 Höfner and Elser v Macrotron GmbH [22]).
• Customs agents – offered, for payment, services including carrying out of customs formalities (Case C‑35/96 Commission v Italy).
• A compulsory pension fund – it was set up by a collective agreement between organisations representing management and labour in particular sectors and made compulsory by the public authorities. Although non‑profit making and pursuing a social objective, it qualified as an undertaking: the amount of the benefits provided by the fund depended on the financial results of the investments made by it; the fund could grant exemption from affiliation where an employer gave its workers benefits of at least an equivalent level; and the fund was in competition with insurance companies (Case C‑67/96 Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie).
• A healthcare trust – the UK Competition Appeal Tribunal found that in purchasing from a private party and providing care home services, a healthcare trust was an undertaking as the trust was “in a position to generate the effects which the competition rules seek to prevent” (BetterCare Group Ltd v Director General of Fair Trading [2002] CAT 7, 69 BMLR 102). Note, however, that this decision must now be read in light of the subsequent Court of Justice ruling in FENIN, which takes a narrower approach to the concept of an undertaking, where the decisive factor was whether the provision of services was an economic activity.