In a recent preliminary ruling the European Court of Justice (ECJ) decided that the end of a bid-rigging cartel is defined by the date of concluding the contract between the company that won a bid and the public authority that invited for tenders. Thus, according to the ECJ neither already the bidding process as such (i.e. the submission of the bid), nor the whole duration of the project (i.e. completion of the contractual works) is decisive (ECJ, decision of 14 January 2021, case C-450/19 – Kilpailu- ja kuluttajavirasto). This is of major importance for the time period, in which a competition authority can prosecute the infringement before it becomes time-barred.
Background of the ECJ’s decision is a Finnish cartel case: In April 2007, the owner of the high-voltage electricity transmission network and the main customer for transmission facilities for this type of energy in Finland published a call for tenders which required each bidder to submit a fix-priced bid for the design and construction of a high-voltage transmission line. Subsequently, one bidding company (Eltel) manipulated the bidding procedure by coordinating its tender with a competitor. On the basis of the concerted bid, Eltel won the contract for the completion of the works which was signed in June 2007. The project lasted far beyond that date as the staggered works were completed in 2009 and the last installment of the price was paid in 2010.
After obtaining a leniency application in 2013 by another participant of the cartelized tender, the Finnish Competition Authority (FCA) concluded that Eltel infringed Article 101 TFEU by having reached an agreement with its competitor on prices, margins and market sharing for the design and construction of electricity lines before submitting its bid (also called “bid-rigging”). Consequently, in October 2014 the FCA submitted an application to the competent Finnish court for the imposition of a fine of EUR 35 million against Eltel whereas the competitor completely escaped paying a fine due to its leniency application.
However, Eltel claimed the relevant infringement to be time-barred. The limitation period for prosecution (five years under Finnish Law) starts to run with the end of a cartel. In fact, in a bidding cartel different dates are conceivable to trigger the limitation period, such as the date of submitting a bid, the date of concluding the contract awarded from the tender, the time of the completion of the (often staggered) construction work, or the time of the last installment payment. So far, this question has not been answered on a EU level. During the Finnish court proceedings the case was referred to the ECJ for a preliminary ruling under Article 267 TFEU for clarification on the interpretation of Article 101 TFEU in this regard.
Under German law, the statute of limitations for prosecution under the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen (GWB)) is also five years. Likewise, the deadline begins with the substantive termination of the infringement, i.e. the end of the cartel.
Regarding the end date of bid-rigging cartels, the German Federal Court of Justice (Bundesgerichtshof (BGH)), being the highest German court, took a point of view last summer which is different to the ECJ: In the beer cartel case the BGH ruled that the infringement does not end as long as the market conduct continues. In that case, beer producers coordinated their sales prices. The BGH concluded that such coordinated increase in price shows its effects (and there the infringement still continues) as long as the product was on the market. The court therefore found that the point of time when a cartel agreement was concluded is not decisive (BGH, decision of 13 July 2020, KRB 99/19 – Bierkartell, see here). Some weeks later the BGH confirmed its legal position for bidding cartels (BGH, decision of 25 August 2020, KRB 25/20 – Unterlassenes Angebot, see here). According to the BGH, the limitation period does not start to run with the conclusion of the contract, but only with the complete execution of the contract. In any case, the contract is not completed before the final invoice is issued, the BGH decided – contrary to the ECJ’s present decision.
In this context, it should be mentioned that the absolute statute of limitations for prosecution under the GWB, which dates back to Directive 2019/1/EU ("ECN+ Directive"), was extended by the 10th amendment to the GWB (see here). The absolute statute of limitations for prosecution under German law in general remains ten years, however under Section 81g GWB it is extended for the duration during which legal proceedings are pending in an appellate court. Thus, the absolute statute of limitations for prosecution does no longer apply during ongoing legal proceedings.
With its decision the ECJ limited the competition authorities’ scope for prosecution of bid-rigging cartels by setting the cartel end date (and consequently the beginning of the limitation period) to the rather earlier date of concluding the contract. Even while it remains to be seen how national courts will react to the ECJ’s decision, in particular the BGH after having decided differently last summer, the result should not be too surprising as the national courts have to take into account the ECJ’s legal opinion when applying Article 101 TFEU.
Can companies “breathe easy”? Certainly not. Following the judgement it can be expected that authorities might rush their investigations, which raises concerns as to the protection of companies’ rights of due process. In particular in view of the improved procedural powers, competition authorities in all EU Member States will obtain due to the adoption of the ECN+ Directive, it will need to be observed closely that companies do not face unjustified measures.
Recent developments and case law show even more, that questions on limitations for prosecution as well as the possible interruption of the limitation period will continue to be subject of expensive and time-consuming court proceedings in the future. In this context, companies must consider that whether invoking the statute of limitations is successful not only depends on the date on which the limitation period starts to run, but also on the question to which extent the statute of limitations could have been interrupted by official acts. For example, in a very recent ruling of the ECJ the court also dealt with the question which official acts regarding an investigation against anti-competitive wrongdoing interrupt the limitation period (ECJ, decision of 21 January 2021, case C-308/19, see here).
In any event, it is clear that an "escape into limitation" is still not an option for companies that have or suspect to have infringed competition law, especially as the circumstances of the individual case are always decisive and could differ substantially from the facts of the cases described above. Thus, a careful assessment of the possible infringement, a line of defense and the next steps is always required. Therefore, companies should seek legal advice at an early stage.