Covid-19 – EU & Competition Law and Public Procurement

1. Public Procurement

Participation in public procurement

In times of uncertainty in the market, there may be an increased interest in participating in public procurements, as the public sector is a stable business partner. The majority of public procurements are preceded by a publication by the contracting authority to allow all potential suppliers to be aware of the procurements and get the same information at the same time. We are happy to assist you and answer your questions on how to participate in public procurement for the first time. We can also help you with the examination of tenders, reviews of the results of the procurement process and appeals of awards.

Public contracts

We notice that our customers have concerns about what will happen with their public contracts due to the spread of covid-19. We therefore recommend that you review your public contracts, inter alia in respect of the following aspects:

• Force majeure – is the current situation covered by a force majeure clause? In such a case, is there a risk that your customer will invoke the force majeure clause, even though you wish to continue to deliver? Is there a possibility for you to invoke a force majeure clause and avoid contractual sanctions if you are not able to deliver?
• Subcontractors – how is the subcontracting agreement affected if a subcontractor is no longer able to deliver? For example, is the possibility of replacing subcontractors regulated? In this context, it may also be necessary to review whether it is possible to cooperate with new subcontractors as required for the delivery and under what conditions cooperation with other suppliers could risk violating competition law rules.
• Changes to public contracts – the possibility to change public contracts is limited to certain situations stipulated by law. Thus, if you wish to renegotiate a public contract, you should always consider whether the changes you are discussing are possible and what consequences there could be.

2. Competition Law

• Competition: If the economic effects of Covid-19 become long-term, the risk increases that companies act, whether intentionally or not, in conflict with the competition rules. Examples of situations that may occur;
  • Competing companies in vulnerable sectors meet (within or outside the framework of professional associations) to discuss potential measures to address the Corona crisis. There is an increased risk that commercially and competition-sensitive information is shared during such meetings. In the UK, there have been demands to put the competition rules aside to allow competing grocery companies to cooperate in the supply of goods. In Norway, the government has issued a provision which enables competitors in the transport sector to cooperate in order to ensure that community-critical functions work, putting the competition rules aside. Could that situation arise also in Sweden?
  • Competitors may rely on buying goods and services from their competitors in order to meet their delivery commitments;
  • Companies may, to a greater extent, be tempted to control their distributors’ pricing or other terms of delivery, or to which customers they sell. What are the opportunities and risks in such situations?
  • Dominant companies may need to prioritize among their customers; how should such prioritization be made to avoid abusing the dominant position (e.g. refusal to supply or even refusal to purchase)?
  • Dominant companies may be tempted to exploit the current situation and raise prices as a result of increased demand for products such as hand sanitizers, toilet paper, etc. When will a company be considered to abuse its dominant position through, for example, overpricing?
• Merger control: The European Commission and the Finnish Competition Authority have informed that merger control processes will be delayed, urging companies to postpone their merger notifications as far as possible. The Swedish Competition Authority has not issued similar communications. However, based on informal contacts, we know that the authority (as of 19 March) expects to be able to meet the applicable deadlines, but that the full review periods may be used to a greater extent.  
• State aid (and municipal law): In times of economic crisis, many private companies are facing difficult financial situations. Therefore, to prevent an economic collapse, it may, in some cases, be justified for undertakings to receive public aid to avoid bankruptcy. In what situations is it possible to provide and/or receive financial or other forms of support from the public (State Aid rules & Local Government Act)? How can any notifiable State aid be approved promptly? For example, the first Covid-19 aid to Danish event organizers was notified and approved by the European Commission within 24 hours.
• Compliance: Companies and their representatives should pay particular attention in times of economic crisis not to influence the decision-making or the handling of specific matters or use their position to gain an undue advantage. The public sector is not cyclical to the same extent as the private sector. Thus, for many private operators it may therefore be interesting to shift focus and increasingly target public sector customers. However, if the company is not used to doing business with the public sector, it is essential to know what is permissible and not in relation to the public sector.