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Wednesday 24.04.2019 | Name days: Nameda, Visvaldis, Ritvaldis

Competition Council fines melioration companies for cartel agreement

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUOn 13 September 2018, three melioration companies – Limbažu Melio, Bauskas meliorācija and Meliorācijas eksperts – were fined by Competition Council for coordinating their offers in procurements organized by Rural Support Service’s administered fund.

For violating competition regulations, the companies were fined more than EUR 70,000 in total.

CC notes that in accordance with European Commission’s approved Rural Development Programme 2014-2020, farmer unions and other companies in Latvia have the option to receive funding from European Agricultural Fund for Rural Development for development of agriculture and forestry infrastructure. Farmer unions have to develop an appropriate project and ensure its implementation in over multiple stages, covering the design of melioration systems, topographic measurements, construction and construction supervision, organizing procurement procedures for each stage. They also have the option to hire project leaders who would organize procurements on their behalf, as well as sign documents. Funding provided by the fund is supervised by Rural Support Centre.

Competition Council started investigating this case after Rural Support Centre noticed suspicious similarities among the fund’s projects in 2016. After inspecting procurement procedures and performing inspections in eleven companies, Competition Council acquired proof of a cartel agreement being in place among Limbažu Melio, Bauskas meliorācija and Meliorācijas experts from 2015 to 2016. The three companies had exchanged information with each other and coordinated their efforts to ensure fixed outcomes in procurement procedures. With that, there was a lack of competition among those companies. They all prepared offers that were not made under conditions of true competition.

CC also found out that Bauskas meliorācija and Limbažu Melio had mutually coordinated their offers addressed to farmer unions’ construction price talks in Sniedze, Pārupe and Aleksandrīna projects. This allowed Limbažu Melio to win in all procurements with the ‘best’ price. Meliorācijas eksperts coordinated their offers with Bauskas meliorācija in Azaidi project, which allowed the company to win in the end.

For the violation of competition regulations, Limbažu Melio has been fined EUR 15,702, Bauskas meliorācija has been fined EUR 28,376, and Meliorācijas eksperts has been fined EUR 26,399.

«Information acquired during the investigation showed that victory in procurements was won not only using violations of competition regulations. After looking through documents received by the Rural Support Centre from applicants and based on which the centre makes decisions in regards to allocation of funding, the Competition Council observed several mismatches in the governance and monitoring of projects by supervisory institutions. For example, offers submitted for price talks had no legal power because they were not signed. We have also found several major violations associated with project managers own organizational operations,» the council explains.

Facts uncovered by Competition Council show that documents were not prepared properly. Aside from that, certain support programmes were organized by only two project managers, and it is because of their actions that specific companies had won in specific procurements. Certain companies had won several times, apparently.

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