The Italian Competition Authority launches an investigation into a cartel in the defense sector

By a decision made on 12 June 2014 (Case I782 MilitaryArsenals), the Italian Competition Authority (ICA) has opened an Article 101 TFEU investigation into an alleged cartel in the defense sector following a report lodged by the Minister of Defence (MOD). The ICA will examine the conducts of 14 defense contractors that have been alleged to have carried out bid rigging practices. The parties coordinated their behaviours with regard to three competitive tender procedures launched by the MOD for the award of a contract for the work of asbestos removal from military vessels.
The MOD reported a strong parallelism in the conduct of the parties in the bidding for the tendered contracts. First, the parties set up three joint-ventures with the purpose to bid. The joint ventures consistently had the same leader and membership. Second, the parties followed the same behavioural pattern. In the first phase of the tender procedure only two joint-venture filed the request to make a bid. In the second phase only a joint-venture bid for the contract which then the contract was awarded. Third, the parties has progressively reduced, and to a significantly extent, the discounts on the prices quoted for tendered contracts.
On the basis of the above, the ICA took the view that the parties might have carried out price fixing and market sharing practices. The application of lower discounts and the decision to make an offer only for a contract would be economically irrational unless the parties had consciously coordinated their behaviour.


As illustrated in previous posts of this blog, the ICA has recently opened many investigations into bid rigging practice affecting competitive tender procedures organized by the public administration, probably with the goal to reduce public expenses. Where in the past the ICA targeted in particular the health sector, in this case it focused on the defense sector. It may be worth also noting that the ICA investigation was not triggered by the report by competitors, but rather by a complaint draft by the contracting authority.

Comments

Post a Comment

Popular posts from this blog

Aspen: The Italian Competition Authority fines a generic manufacturer of drugs for excessive pricing

By the decision made on 29 September 2016 in Aspen [i] , the Italian Competition Authority (ICA) has imposed a fine of more than EUR 5 million on the Aspen group (Aspen), a South African manufacturer of generic drugs. Aspen violated Article 102 TFEU by imposing excessive prices for the supply of the so-called ‘Cosmos drugs’. These drugs included Leukeran, Alkeran, Purinethol and Tioguanine, which included the active principles of chlorambucil, melphalan, mercaptopurine and tioguanine, respectively. All these drugs were used to treat cancer pathologies and included in a wider package of pharmaceutical products, whose marketing rights had been purchased by Aspen from the originator GlaxoSmithKline (GSK) in 2009. Aspen had a dominant position in the relevant product markets for the commercialization of anti-cancer drugs manufactured using the active principles of alkeran, leukeran, purinethol and tioguanine. It had the only one market authorization for the sale of drugs and potential ...
Read more

Geographical allocation of turnover in aviation mergers: What the European Commission recently hold

The European Merger Control Regulation (ECMR) stipulates that only concentrations with a European dimension fall within the regulatory jurisdiction of the European Commission to review. A concentration is presumed to have such a dimension when it meets the financial threshold in Article 1 of the ECMR. To this end, it is necessary to calculate the turnover generated by the merging parties within the Community or in one or more member states. However, the geographical allocation of the turnover required by Article 1 for the purpose to establish the Commission’s jurisdiction can be a tricky issue in case of mergers between undertakings with a cross-border activity such airliners. In fact, the activities of airlines span several countries as they typically operate flights and sell tickets in many national markets. Recently, the Commission has dealt with the issue at length in the Ryanair/Aer Lingus case. It identified three possible methodologies for geographical allocation of turnover: -...
Read more

The European Commission unconditionally clears the Facebook/WhatsApp merger

By a Phase I decision the Commission unconditionally approved the Facebook $ 19 billion acquisition of WhatsApp ( Case No COMP/M.7217,Facebook/WhatsApp) . The Commission was required by the parties to review the transaction by means of a reasoned submission filed on the basis of Article 4(5) of the EU Merger Regulation. Indeed, the merger was not a concentration with EU dimension within the meaning of Article 1 EUMR falling within the Commission jurisdiction, since the EU turnover of WhatsApp in 2013 failed to met the financial thresholds in that provision. The Commission identified three relevant product markets affected by the concentration. It restrained the first relevant market, the market for consumer communication services, to the communication apps for smartphones, because WhatsApp was available only for this device. Following its approach in Microsoft/Skype (Case M.6281), upheld by the General Court in the case T-79/12, Cisco Systems and Messagenet v Commission, the Com...
Read more