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The joint tender submitted for the public procurement of roundwood road transport was a distortion of competition

The Estonian Competition Authority established that the extensive joint tender submitted by the private limited company Prenton to the State Forest Management Centre in the public procurement of roundwood road transport was a distortion of competition and issued a precept to Prenton, which represents the joint bidders, to terminate the cooperation between them at the request of the state forest manager. 

As a result of the tender organised in 2018, the majority of the orders of the State Forest Management Centre were awarded to a joint tender by 11 economic operators, which covers the majority of the main Estonian forest carriers and is represented by the private limited company Prenton. The remaining tenderers were generally smaller economic operators and their share in terms of both the number of cars and the transport volumes was less than 1/3. Although Prenton offered an average price about 1/4 higher than the other tenderers in the public procurement, the volume of transport offered by the others was so small that Prenton was awarded most of the contract volume. As the economic undertakings had decided not to compete with each other when submitting their joint tender, the state forest manager did not receive any competing tenders from them. 

The Public Procurement Act provides an opportunity to submit a joint tender in a public procurement. However, under the Competition Act, competitors may enter into agreements with each other only under strictly limited conditions. In particular, competitors may submit joint tenders if they are not individually able to submit a competitive tender. According to the Estonian Competition Authority, the joint tender exceeded the limits of admissibility in this case. The parties to the joint tender provided various reasons as to how the cooperation allegedly contributed to security of supply, logistical efficiency, etc. The Estonian Competition Authority took the view that these benefits of the joint tender did not in fact exist or were not sufficient to justify such extensive cooperation. 

The authority also finds that the precept issued to Prenton unfortunately necessitates the replacement of the missing service volumes for the state forest manager. As the contracting authority, the State Forest Management Centre is best able to assess in what timeframe and how to find a replacement for the service offered by Prenton and its joint tenderers, in particular by organising a new public procurement. For this reason, the State Forest Management Centre will be able to determine the time for terminating the cooperation that distorts competition.

The economic undertakings participating in the joint tender are the private limited company Prenton, the private limited company AT Transwood, the private limited company Expertline, the private limited company HANT, the private limited company Iriscorp Transport, the private limited company Kanniku, the public limited company KaroTrans, the private limited company Kolmestar, the private limited company NLLW, the public limited company Sumros Grupp, and the private limited company Vikingmodum.
 

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