The National Markets and Competition Commission (CNMC) has been trying for years to ensure that companies sanctioned for participating in cartels with the aim of manipulating tenders of Public Administrations are not only punished with the mandatory fine, but also that they are prohibited from bidding on new public contracts. The agency has been trying for years, but no company has been vetoed for public contracts at the moment. None.
The legislation establishes that companies sanctioned by “distortion of competition”They may be punished with the prohibition of contracting with the Administrations. But in order to be vetoed, they must have been sanctioned by resolution or final judgment. The companies are managing to avoid the application of this prohibition to contract with the Administrations by appealing the sanctions before the courts. Without a final judgment there is no prohibition.
The CNMC already accumulates a dozen files (resolved between March 2019 and, the last of them, just two weeks ago) with which it has accredited anti-competitive conduct and through which it has requested the Ministry of Finance to apply the prohibition of hiring after establishing the specific duration of that exclusion.
The CNMC has tried unsuccessfully to get the Government to prohibit more than a hundred companies and 37 executives from hiring with the Administration
However, the challenge of the resolutions by the companies will de facto freeze the application of the sanctions for years, with a expected delay of three to four years since the publication of the resolution, according to various legal sources consulted.
Veto and millionaire fines
In total, the CNMC has already demanded that the Government prohibit bidding for public contracts to a total of 144 Business -which also accumulate fines for a total of 309 million euros– for participating in the formation of cartels to distribute public tenders, according to the regulator’s records. In parallel, the agency has also requested the exclusion of public tenders for 37 managers personally for being directly responsible for bad practices.
Among the sanctioned companies are subsidiaries of the large construction and engineering groups (ACS, FCC, Ferrovial, Sacyr, Acciona, OHL, Comsa, Isolux, Elecnor or Duro Felguera) and also subsidiaries of some industrial giants (Alstom, CAF, Bombardier or Thales).
The dozen files that include the request for a ban on hiring punish anti-competitive practices in multiple sectors: there are several that include bad practices in contracts for railway works, road maintenance, several in the business of passenger transport or transportation. schools, consultancies, industrial assembly, solid fuel contracts or also in the management of bibliographic files, meteorological radars or in the supply of radiopharmaceuticals.
Companies and executives freeze sanctions with resources and postpone them for three to four years
The list of those sanctioned could have been longer, but a total of 15 companies and 3 executives have been exempted from the prohibition of hiring for taking advantage of the CNMC’s leniency program (that is, for voluntarily denouncing bad practices and collaborating with the regulator in their investigations), which generally also implies a 50% reduction in the financial fine imposed for illegal practices.
Judgment of the Supreme
The Law on Public Sector Contracts effectively establishes that companies must have been sanctioned “with firm character” so that the prohibition of contracting with Public Administrations can be applied to them. On the one hand, the appeals presented to the courts by the companies postpone the execution of their exclusion from public tenders, since this means that there can be no firm sanction until the judicial process is exhausted.
On the other hand, in order for the sanction to be considered firm, the duration and scope of the ban on contracting must be established in each case (between 2 and 5 years, depending on the severity of the behavior). These deadlines are not set by the CNMC, but must be approved by the Ministry of Finance at the proposal of the Consultative Board of Public Procurement.
Until now, the CNMC has sent each of the resolutions that included the sanction of excluding companies from public tenders to the Advisory Board. A sentence of the Supreme court issued on September 14, further hinders the process of applying the ban on hiring.
The Contentious Chamber of the High Court recognizes, on the one hand, the power of the courts to suspend both the payment of fines and the prohibition of contracting. And, in addition, it endorses that a court – in this case the National High Court – suspends all actions aimed at setting the duration and scope of the veto. That is, the Supreme Court considers that the courts can directly suspend the sending by the CNMC of the resolution of the file to the Consultative Board of Public Procurement.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.