In its most recent annual report, the Czech Competition Authority stated that the investigation of bid-rigging cartels would be its highest priority. The issue of bid rigging is a hot topic that has attracted the attention not only of the CCA, but also that of the Czech police and public prosecutors, who have been very active in investigating bid-rigging cartels in recent years.
With this increased level of scrutiny, companies should be aware that potential antitrust behavior brings not only the risk of high fines from the CCA, but more importantly criminal sanctions, which may be catastrophic for both the company and its management.
Criminal Law Implications of Bid Rigging
Under Czech law, companies can be held liable for certain crimes. However, unlike individuals, corporate entities cannot be held criminally liable for breaches of antitrust law. Thus, formally, only the CCA and/or the European Commission can investigate and punish cartels for bid rigging.
However, recently we have observed a growing trend whereby the police and public prosecutors are actively going after bid-rigging cartels and pursuing companies in such cases through different means. Specifically, they are prosecuting them for “manipulating public procurement and public tenders” - a crime for which companies can be held criminally liable.
This practice has material implications for companies operating in the Czech Republic. In practice, if a company is convicted for bid rigging, it faces, among other things, the following negative consequences: (i) substantial fines; (ii) a non-discretionary ban from participation in public tenders for at least five years; and (iii) significant reputational damage, given that criminal records are publicly available and cannot be deleted for at least five years, and in certain cases even longer.
Such penalties can strike a deathblow to companies - especially those which depend on public tenders for their business.
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