ECJ: The conclusion of a contract marks the end of a bidding cartel

The Court of Justice of the European Union (“ECJ”) gave its judgment in case C-450/19 on the 14th of January 2021. The judgment concerned a request to the ECJ for a preliminary ruling made by the Supreme Administrative Court of Finland (korkein hallinto-oikeus, “KHO”) in a case regarding competition infringement.

Background

The request for a preliminary ruling submitted by KHO to the ECJ related to a case initiated by the proposal by the Finnish Competition and Consumer Authority (“FCCA”) to the Market Court to impose a fine of EUR 35 million on Eltel Networks Oy and Eltel Group Oy (“Eltel”) for participating in a bidding cartel.

Based on a Leniency application made by Empower Oy (“Empower”), the FCCA initiated an investigation regarding an alleged cartel between Eltel and Empower. The cartel relates to the tender competition regarding power line construction, in which Eltel was awarded the contract in 2007. According to the FCCA Eltel had infringed paragraph 4 of the Finnish Act on Competition Restrictions (laki kilpailunrajoituksista) and Article 101 TFEU by entering into agreements with Empower regarding prices, profit-margins and the allocation of design or construction works relating to high-voltage power lines for power transmissions in Finland.

The Market Court rejected the FCCA’s application to impose a fine after establishing that the competition infringement conducted by Eltel had been time-barred pursuant to the five-year time limit in the Law prohibiting restraints of competition. The FCCA brought an appeal against the decision of the Market Court before KHO.

Questions referred

In its request for a preliminary ruling KHO asked ECJ to take a stand on whether a bidding cartel pursuant to Article 101 TFEU, taking into account its economic effects, can be considered to have lasted:

  • up to a point in time when the last instalment is paid for the construction work,
  • at least up until the point at which the works in question are completed,
  • until the point at which the company that committed the infringement had submitted a tender for the works concerned, or
  • until the company had entered into a contract for the execution of the works.

ECJ’s reply

In its judgment, the ECJ went with the latter option and stated that Eltel’s participation in the competition infringement covered the period during which Eltel’s bid was valid and may have led to a final contract. According to the ECJ, the infringement cannot be considered to have continued after this, even if it would have caused financial harm to other operators on the relevant market. This is due to the circumstance that the effects of a cartel, which restrict the competition, cease by the time the relevant outlines of the contract and the total price for the construction work is determined. The ECJ left it up to KHO to ascertain these points in time.

In its judgment, the ECJ was critical to the FCCA’s, the Finnish government’s and the German government’s notifications stating that determining the duration of the infringement as too short would jeopardize the efficiency requirements set out by Article 101 TFEU. The ECJ, like Advocate General Pitruzzella, confirmed that an efficient enforcement of Article 101 TFEU cannot justify artificially extending the duration of the infringement for the purpose of enabling proceedings to be brought.

In conclusion

After receiving the ECJ’s judgment KHO will give its own final judgment in the case. KHO will probably rely on ECJ’s reply and most likely, in line with the Market Court, state that the competition infringement is time-barred and not impose a fine.

Further information