When companies bid jointly
Call for tenders regarding public and private contracts are organized in order to create competition for the tendered contract. In certain cases undertakings jointly bid for a public or private contract. Often these forms of cooperation are called “consortia agreements” even though the designation of the cooperation is not decisive for the assessment of the agreement under the competition rules. In Denmark, this type of cooperation is quite common and can be valuable for public as well as private contracting entities. However, this requires that such a cooperation does not in practice restrict competition thereby infringing the Competition Act, but rather that it creates value for the customers.
Accordingly, undertakings must pay attention to competition rules when they consider entering into a consortium. Competition rules prohibit undertakings from entering into agreements that restrict competition. This prohibition has been in the Danish Competition Act since 1998, but has been applicable under the corresponding prohibition in EU´s competition rules since Denmark became a member of the European Communities in 1972, cf. box 1.1 below. The principles of this prohibition were assessed in the Road Marking Case, which was upheld by the Supreme Court.1.
Furthermore, it follows from competition rules that consortia agreements, which benefitconsumers 2, are typically lawful when a number of other conditions in Section 8 of the Danish Competition Act are fulfilled - even if the joint bidding consortium agreement may in principle
restrict competition, cf. Chapter 3 below.
As a general rule if the parties to a consortium agreement are not competitors for the contract, the consortium is to carry out, a consortium agreement will typically be legal in accordance with Section 6 of the Danish Competition Act. Following Section 8 of the Danish Competition
Act, this will also be the case if the undertakings cooperating in the consortium can carry out the tendered contract significantly better and/or cheaper for the contracting authority than they could have done individually, and if the undertakings do not exchange more information than necessary to fulfill it. Many consortia agreements will therefore be beneficial for competition.