Prosecuting cartels without
direct evidence - best practices
Kamil Nejezchleb
The Czech Competition Authority
Cartel Department
Albania, Tirana, 20 - 21. 3. 2014
Outline
• Cartel graphic example – what do we have?
• How to prove Explicit collusion with indirect evidence –
general remarks
• Indirect evidence – general types
• Communication evidence
• Economic evidence
• Special types of indirect evidence in bid rigging cases
• Czech experience
– Facility management
– Waste management collection
– Specialized gardening equipment
Cartel graphic example
„my behavior was not
result of cartel but
result of general
business strategy!“
Price
Communication
evidence
Time
„How can I prove cartel (explicit collusion) without direct evidence of
explicit collusion?“
I have to prove that undertakings behavior on
the market is anticompetitive because of
previous coordination with its competitor(s)!
Agreement
Concerted
practice
= inexplicable by parallel behavior, tacit collusion
and/or by general coincidence
„bulletproof“ CARTEL STORY
Indirect evidence – general types
• Communication evidence
– Could be proof of cartel as such
– Better evidential value
• Economic evidence
– Very often ambiguity problem
– Almost impossible to proof a cartel based only on
economic evidence
Communication – evidential quality
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Position within undertaking = „who“?
Type = „where“?
Frequency = „how often“?
Number of undertakings = „how many“?
Communication platform = „by what“
Content = „what“?
Reciprocity?
Plausibility / reality
„What“ - Communication content
Evidence
power
direct evidence
- cartel
• Future strategic commercial behavior
(prices, markets, output, inovation)
Indirect
evidence
• Unrelated to strategic commercial behavior
Economic evidence
• General market characteristics
• Market behavior
• Comparable markets?
Possibility of
collusion
Special types of indirect evidence
- bid rigging cases
• Bid rigging
• Special indirect evidence in bid rigging cases
– Regarding one procurement
– Wider bidding behavior
– Compensation
Special indirect evidence – one
procurement
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Unusually high prices, margins
Number of bidders
Indexes in bids
Similarities in bids (mistakes, text, ordering of
documents, fonts, declarations, brands etc.)
One delivering company
One time of submission
Unacceptable bid form strong undertaking
(criteria, missing statements, extremely high bid)
Alternative bids
Special indirect evidence – wider
bidding behavior
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Repetition of bids + winner and prices
Rotation
Withdrawing pattern
Subcontracting between bidders
Czech bid –rigging case experience
• Facility management Litoměřice
• Waste management collection services
• Specialized gardening equipment distribution
Facility management Litoměřice
2
1
O
Waste collection
• One specific procurement – „very strange bid
stats“
• Communication considered proven (daily basis)
• Inspections (cartel communication, alternative
bids)
• Leniency at later stage
• Customer sharing A+B+C+D – concerted practice
• Sanctions – 4 million EUR (approx. 500 mil LEK)
Waste collection – graphic interpretation
Area 1
Max price
Area 2
Almost
max
price
Area 3
Max price
A - Same
bank
quarantee
height
Max price
A - Same
sanciton
height
Bank guarantee
sanction
Bank guarantee
Best
C
Price
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•
sanction
Bank guarantee
Best
B
Best
D
Price
sanction
Price
One procurement – 3 separate parts (Area 1, Area 2, Area 3)
3 assessment criteria – price (lower the better) , bank guarantee, (higher the better), sanction (higher the better)
4 bids submited to each part from 4 undertakings – A, B, C, D
Bid rigging B +C + D (rotation)
Always one
of B,C, D just
slightly
lower price,
slightly
higher
sancions and
much higher
bank
quarantee
Equipment for specialized garden works
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Same bid differing only by price
Undertakings form different sectors
Contact - only business card
Shortcomings of Czech Public Procurement
Act
• Pending at the Czech NCA – settlement phase
Recommendations
• Always try to build a strong story
• Set the story within plausible scenario (market
characteristics)
• Use evidence together rather than individually –
cumulative effect
• Exclude as much as possible coincidence and
possible parallelism
• Prefer quality rather than quantity
• Be very careful when using econometric or
statistic as evidence
Questions?
Contact:
[email protected]