CMS Expert Guide: Right Bidding vs Bid Rigging in Bulgaria

The bidding process and the procedures for public procurement tenders are regulated in Bulgaria by the Public Procurement Act (“PPA”) in force from 15 April 2016, last amended on 5 August 2022.

Bid rigging is a form of cartel activity, one of the gravest infringements of Bulgarian and EU competition law. Under Bulgarian law, it is regulated by Article 15 of the Protection of Competition Act (“PCA”).

Bid rigging can lead to serious sanctions (e.g. a fine based on a percentage of an infringer’s annual aggregate turnover up to 10%), fines for the individuals involved, reputational harm (e.g. negative media publicity) and damage claims from third parties (e.g. the affected bidders or the contracting authority). The authority competent to impose fines and financial sanctions is the Commission for the Protection of Competition (“CPC”).

Under Bulgarian law, there is no provision which considers the awarded contract as null and void. However, a (cartel) agreement between bidders which is found to infringe Article 15 PCA is null and void.

Among the grounds on which a contractor, acting at its own discretion, might exclude a bidder, is if that bidder has concluded an agreement with other parties to distort competition, where the infringement has been established by a decision of the competent authority (Article 55, par. 1, point 3 PPA). This option for exclusion must be set out by the contractor upfront when announcing the opening of the tender.

There is no explicit regulation concerning the exclusion of bidders from future bidding processes.

However, the abovementioned Article 55, par. 1, point 3 PPA does not differentiate between pending and future tender procedures. Therefore, the rule can also be applied by the contractor to future tender procedures, where the bidder was found to have infringed Article 15 of the PCA in past cases.

If the NCA establishes an infringement of competition rules, as part of its sanctioning decision it will order the suspension of the infringement and can impose on the infringers behavioural and structural measures aimed at the restoration of competition. In theory, such measures can include a tender ban.

Yes. At the end of 2020 the CPC adopted guidelines for combatting bid rigging (i.e. collusive tendering) in public procurement, based on amendments to the PPA, EU best practices and OECD rules and recommendations.

A key principle of these guidelines is that contracting authorities should lead the way in combatting bid rigging by organising and conducting procedures that make coordination between the participants as difficult as possible. To assist contracting authorities, the CPC ensures that the guidelines include the main problems observed in tenders, the possible factors contributing to bid rigging, and a description of the circumstances that could indicate anti-competitive behaviour. It should be noted that the existence of one or more circumstances may only result in a suspicion of bid rigging, but may not necessarily constitute evidence of anti-competitive agreement between bidders. In the case of such suspicion, the contracting authority should notify the CPC and thus trigger the option for an investigation.

Other than the above, there are no separate guidelines from the CPC on lawful joint bidding/consortia in the tender process. 

From 2020 to 2022, the number of new proceedings on anticompetitive agreements (bid rigging included), and the number of issued sanctioning decisions by the CPC on such cases remained low, fewer than five per year. However, one can see a constant trend of the CPC’s focus on bid rigging increasing. In 2021, the CPC initiated several proceedings on its own initiative to establish bid-rigging, and established bid rigging infringements and imposed financial penalties on more than 30 companies participating in tenders under the National Programme for Energy Efficiency of Multi-family Residential Buildings. 

In 2022, the CPC has initiated two proceedings to investigate bid rigging. Under one of these, the CPC has already put forward accusations for bid rigging.

In 2021, the CPC issued four cartel decisions. Only one concerned bid-rigging. Therefore, the ratio was 25%. The aggregated information for 2022 has not been published yet. 

As noted, there is a constant trend of the CPC’s focus on establishing and sanctioning bid-rigging increasing. 

In 2021, the CPC issued one decision sanctioning bid-rigging concerning companies participating in tenders under the National Programme for Energy Efficiency of Multi-family Residential Buildings in the municipality of Plovdiv. The CPC imposed on these ca. 30 companies sanctions equalling to a total of ca. EUR 200,000. One of the participants in the cartel was released from sanctions through leniency, while another was granted a 50% reduction in the sanction.

The aggregated information for 2022 has not been published yet. 

Yes. One of the participants in a bid-rigging cartel sanctioned by the CPC in 2021 was released from sanctions through leniency, while another was granted a 50% reduction in the sanction.

No. There is no criminal liability for bid rigging in Bulgaria.

Yes. Over the last several years the CPC has constantly articulated and demonstrated its focus on the fight against bid-rigging/collusive tendering.

It is also worth mentioning that the CPC carried out a study of the European practice in applying a screening method for establishing indicators of bid rigging. As a result, the CPC adopted an internal document called Methods for Detecting Bid Rigging, which describes the rules and stages for screening based on economic and statistical analyses. The developed methodology will support the analytical work of CPC’s experts in detecting bid rigging cases in the future. 

The most recent cases concern the bidders for energy efficiency projects and the market for toners and other printing materials. The CPC has stated its focus on important economic sectors such as financial services, energy, pharma, trade with fuels, food products etc., so (new) bid-rigging cases can also be expected in these sectors.

In 2023, the CPC has repeatedly set the goal of active counteraction against bid rigging in public procurement.