Competition Law and Public Procurement Market Access Barriers

1. Introduction

Public procurement is a major competitive marketplace in which governments and public authorities purchase goods, works and services from private and public suppliers. Competition law becomes relevant because procurement rules can either open markets to competing suppliers or create barriers that exclude otherwise capable undertakings.

A public procurement market access barrier is a legal, administrative, technical, financial, informational, geographic, or structural condition that makes it materially more difficult for qualified suppliers to enter or compete for public contracts.

The OECD identifies excessive administrative complexity, high technical or financial requirements, large guarantees, discriminatory conditions and restricted access to procurement information as potential barriers to participation.

The competition problem is particularly important because restricting the pool of bidders may:

• reduce competitive pressure;
• increase procurement prices;
• reduce innovation;
• protect incumbent suppliers;
• facilitate bid rigging;
• discriminate against SMEs or foreign suppliers;
• create artificial entry barriers;
• strengthen the market position of incumbent firms; and
• ultimately reduce value for money for the public purchaser.

The OECD specifically recommends that participation requirements should be transparent, non-discriminatory and not unreasonably restrictive, and that requirements should be proportionate to the size and subject matter of the contract.

2. Meaning of Market Access Barriers in Public Procurement

Market access barriers arise when procurement arrangements unnecessarily restrict the number or type of undertakings capable of participating.

Typical barriers include:

A. Excessive technical qualifications

A contracting authority may require:

• a particular technology;
• a particular certification;
• previous experience with the same public authority;
• proprietary technical standards;
• a particular brand or specification.

If the requirement is not objectively necessary, it may exclude equivalent suppliers.

B. Excessive financial requirements

Examples include:

• disproportionately high turnover requirements;
• excessive bid security;
• large performance guarantees;
• minimum capital requirements unrelated to the contract.

The OECD notes that large monetary guarantees can prevent otherwise qualified smaller firms from entering procurement markets.

C. Incumbency requirements

A tender may indirectly favour existing suppliers by requiring:

• prior contracts with the same authority;
• extensive historical performance records;
• existing infrastructure;
• an established local network.

This can create an incumbency advantage.

D. Geographic restrictions

Requirements that suppliers maintain:

• a local office;
• local manufacturing;
• local employees;
• domestic production facilities

may restrict participation by firms from other regions or countries.

Such conditions require careful justification where they exclude otherwise qualified competitors.

E. Domestic preference

Governments sometimes reserve procurement for domestic enterprises or impose domestic-content requirements.

Such measures can pursue industrial-policy or national-security objectives, but they can also restrict competition. Current OECD analysis identifies domestic-content requirements, award preferences, reserved contracts and other measures as mechanisms that can restrict foreign access to procurement markets.

F. Information barriers

Competition can be weakened when:

• tender notices are difficult to find;
• procurement information is available only through restricted channels;
• documents are inaccessible;
• information is published too late;
• incumbent suppliers receive additional information.

The OECD stresses that free, transparent and machine-readable procurement information supports effective competition.

3. Competition-Law Framework

A. Anti-competitive agreements

The first competition concern is collusion among bidders.

Market access barriers can make collusion easier because a small group of incumbent suppliers repeatedly meets in procurement markets.

Common forms include:

• cover bidding;
• bid rotation;
• market allocation;
• bid suppression;
• subcontracting arrangements designed to compensate losing bidders.

The OECD regards bid rigging as one of the most serious competition risks in public procurement.

B. Abuse of dominance

A dominant undertaking may attempt to preserve its position by:

• controlling an essential procurement input;
• refusing access to technical infrastructure;
• imposing discriminatory conditions;
• preventing interoperability;
• influencing tender specifications;
• tying access to complementary products.

The competition question is whether the conduct constitutes an exclusionary practice rather than legitimate commercial competition.

C. Government-created barriers

Not every procurement restriction is automatically an infringement of competition law.

Public authorities may legitimately impose requirements concerning:

• national security;
• public health;
• environmental protection;
• technical safety;
• professional qualifications;
• financial reliability;
• continuity of public services.

The central issue is generally whether the restriction is objectively justified and proportionate to the legitimate procurement objective.

4. Major Types of Procurement Market-Access Barriers

5. Important Case Laws

1. Fabricom SA v Kingdom of Belgium

Joined Cases C-21/03 and C-34/03, CJEU

Facts

The dispute concerned procurement rules dealing with undertakings that had previously participated in preparatory work connected with a public contract.

The rules effectively created a significant disadvantage for such undertakings when they later sought to participate in the procurement procedure.

Principle

The CJEU emphasised that an undertaking should not automatically be excluded merely because it participated in preparatory activities.

The contracting authority must consider whether the prior involvement actually creates a competitive advantage that cannot otherwise be neutralised.

Competition significance

The case illustrates the principle of proportionate access.

An automatic exclusion can unnecessarily reduce the pool of competitors.

The appropriate response may instead involve:

• disclosure of relevant information;
• equalisation of information;
• allowing competitors to respond to the advantage;
• other safeguards against competitive distortion.

Relevance

Fabricom is particularly useful when analysing incumbent advantage and unequal access to procurement information.

6. Assitur Srl v Camera di Commercio, Industria, Artigianato e Agricoltura di Milano

Case C-538/07

Issue

The case concerned rules that could prevent related undertakings from simultaneously participating in a procurement procedure.

Principle

The CJEU examined whether automatic exclusion of connected undertakings was compatible with European procurement principles.

A blanket exclusion mechanism could go beyond what was necessary to prevent collusion.

Competition significance

There is an important distinction between:

legitimate anti-collusion controls

and

unnecessarily excluding competitors merely because of corporate relationships.

Procurement authorities should address the actual risk of coordinated bidding rather than automatically eliminating potentially competitive offers.

Market-access relevance

The case demonstrates that anti-collusion rules themselves can become market-access barriers if designed too broadly.

7. Serrantoni Srl and Consorzio stabile edili Scrl v Comune di Milano

Case C-376/08, CJEU

Principle

The CJEU examined automatic exclusion rules concerning undertakings associated with consortia.

The Court stressed the importance of proportionality when procurement rules seek to prevent collusive behaviour.

Competition significance

An authority may legitimately prevent:

• multiple bids controlled by the same economic interests;
• manipulation of competition;
• artificial multiplication of bidders.

But a procurement rule should not exclude undertakings automatically where the underlying competitive risk can be addressed through less restrictive measures.

Market-access lesson

Procurement rules should distinguish between:

actual competitive risks

and

mere formal relationships between undertakings.

This is important in industries where corporate groups, joint ventures and procurement consortia are common.

8. Michaniki AE v Ethniko Symvoulio Radiotileorasis

Case C-213/07, CJEU

Background

The case concerned Greek rules relating to participation in public contracts and restrictions designed to prevent conflicts of interest and concentration.

Principle

The CJEU examined whether national rules could impose restrictions on participation beyond what was necessary to protect the integrity of public procurement.

Competition significance

The decision demonstrates that:

• procurement integrity is legitimate;
• conflict-of-interest controls are legitimate;
• preventing excessive concentration may be legitimate;

but restrictions affecting market access must comply with applicable EU legal principles and proportionality.

Relevance

It is particularly useful where procurement restrictions intersect with:

• media concentration;
• ownership restrictions;
• conflicts of interest;
• cross-ownership;
• public-contract participation.

9. Ambisig – Ambiente e Sistemas de Informação Geográfica SA v Nersant

Case C-601/13, CJEU

Issue

The case involved the use of technical and professional capacity criteria in procurement.

Principle

Selection criteria must be connected to the subject matter and appropriate to the contract.

Procurement authorities cannot simply impose qualification requirements without considering their relationship to the actual contract.

Competition significance

Qualification requirements have a dual function:

1. protect the contracting authority from unreliable suppliers; and
2. determine who can enter the competitive process.

Excessive requirements therefore operate as entry barriers.

Example

Suppose a government wants to procure a relatively small software-maintenance contract but requires bidders to demonstrate experience managing projects worth €500 million.

That requirement may dramatically reduce participation without necessarily improving procurement quality.

Lesson

Qualification criteria should be proportionate to the contract.

10. Croce Amica One Italia Srl v Azienda Regionale Emergenza Urgenza

Case C-440/13, CJEU

Issue

The case involved exclusion from a procurement procedure and the relationship between procurement integrity and the rights of participating undertakings.

Principle

Procurement authorities have considerable discretion in evaluating whether an undertaking satisfies reliability requirements, but the exercise of that discretion must comply with applicable legal safeguards.

Competition significance

Integrity requirements can protect procurement markets from:

• unreliable suppliers;
• fraudulent conduct;
• serious professional misconduct;
• manipulation of procurement procedures.

However, exclusion mechanisms can also become market-access barriers if applied arbitrarily or disproportionately.

Lesson

There must be a balance between:

procurement integrity

and

continued access to competitive markets.

11. Excel Crop Care Ltd. v Competition Commission of India

(2017) 8 SCC 47, Supreme Court of India

This is one of the most important Indian competition-law decisions involving public procurement.

Facts

The case concerned procurement of aluminium phosphide tablets by the Food Corporation of India.

The Competition Commission of India found evidence of coordinated bidding among manufacturers.

The Supreme Court considered the competition-law consequences and ultimately dealt with the penalty methodology.

The record included evidence concerning identical or coordinated pricing and participation in procurement tenders.

Principle

Bid coordination in public procurement can constitute an anti-competitive agreement under Section 3 of the Competition Act, 2002.

Competition significance

The case demonstrates the opposite side of market-access barriers:

If procurement is restricted to a small group of suppliers, repeated interaction among those suppliers can increase the risk of:

• price coordination;
• bid rotation;
• tender manipulation;
• market allocation.

The OECD similarly observes that procurement markets with relatively few suppliers and high entry barriers can create conditions conducive to collusion.

Key lesson

Low participation can simultaneously be a market-access problem and a bid-rigging risk.

12. Kolin Inşaat Turizm Sanayi ve Ticaret AŞ v Croatian Roads Ltd

CJEU, 2024

This case is particularly important for the foreign market-access dimension of procurement.

The CJEU considered participation by an undertaking from a country that was not covered by the EU's applicable reciprocal procurement-access arrangements.

Principle

The Court held that economic operators from countries that are neither parties to the WTO Government Procurement Agreement nor covered by an applicable reciprocal EU agreement do not enjoy the same guaranteed access to EU procurement markets.

Competition significance

This illustrates that public-procurement market access can be influenced by:

• WTO commitments;
• reciprocal procurement agreements;
• nationality;
• trade policy;
• procurement legislation.

Important distinction

A restriction on foreign access is not necessarily an ordinary competition-law infringement. It can instead arise from procurement law and international trade law.

Therefore, a proper legal analysis must distinguish:

competition law → procurement law → trade law → national industrial policy.

13. Indian Competition-Law Perspective

Under the Competition Act, 2002, public procurement is particularly relevant to Section 3.

Section 3

Section 3 addresses agreements that cause or are likely to cause an appreciable adverse effect on competition.

Procurement-related conduct may include:

• bid rigging;
• collusive bidding;
• price fixing;
• market allocation;
• bid suppression.

Section 4

Where a dominant undertaking is involved, Section 4 may become relevant to conduct such as:

• discriminatory access;
• denial of market access;
• unfair conditions;
• leveraging dominance into related procurement markets.

Section 19

The CCI may consider factors relevant to market structure and competitive effects, including:

• barriers to entry;
• size and importance of the market;
• market structure;
• market power;
• consumer/public purchaser interests.

14. Procurement Market Access and the Essential-Facilities Concept

A particularly important problem occurs where an incumbent controls infrastructure that competitors need to participate in public procurement.

Examples include:

• railway infrastructure;
• electricity transmission networks;
• telecom infrastructure;
• government data platforms;
• payment infrastructure;
• certification systems;
• digital procurement platforms;
• testing laboratories.

If access is denied or supplied on discriminatory terms, competition authorities may need to consider whether the infrastructure constitutes an essential or strategically significant input.

The analysis normally considers:

1. whether the input is genuinely indispensable;
2. whether alternatives exist;
3. whether the controlling undertaking has market power;
4. whether access is technically feasible;
5. whether refusal has exclusionary effects;
6. whether legitimate justification exists.

15. Digital Procurement and Market Access

Modern public procurement increasingly takes place through electronic platforms.

Digital barriers can include:

• proprietary procurement platforms;
• incompatible electronic-signature systems;
• restricted APIs;
• inaccessible tender databases;
• discriminatory platform access;
• excessive technical requirements;
• algorithmic screening;
• automated disqualification.

Digital procurement can actually reduce entry barriers by publishing tender information centrally, permitting online submission and creating searchable procurement records. The OECD's recent work specifically identifies e-procurement as capable of reducing administrative burdens and improving access for national and foreign bidders.

However, if a dominant procurement platform controls access to tender information or participation, it can itself become an important competition concern.

16. SMEs and Market Access

SMEs are particularly vulnerable to procurement barriers.

Their participation costs can include:

• preparing technical documents;
• obtaining certifications;
• arranging bid security;
• hiring legal consultants;
• producing financial statements;
• demonstrating previous experience;
• complying with complex electronic procedures.

The OECD notes that the fixed costs of bidding and prequalification can disproportionately affect SMEs.

Competition-oriented solutions

Authorities can consider:

• dividing contracts into lots;
• proportional turnover requirements;
• reasonable bid security;
• simplified documentation;
• electronic submission;
• framework agreements;
• consortium participation;
• subcontracting opportunities;
• functional rather than brand-specific specifications.

17. Bundling as a Market-Access Barrier

Suppose a government combines:

• construction;
• software;
• maintenance;
• cybersecurity;
• equipment supply

into one enormous contract.

Only a few multinational firms may have the capacity to bid.

This can create artificial concentration.

Breaking the procurement into separate lots may allow:

• SMEs to participate;
• specialist suppliers to enter;
• greater price competition;
• technological innovation;
• multiple suppliers to develop market capabilities.

But bundling can also have legitimate efficiencies, such as:

• integration;
• reduced transaction costs;
• single-point accountability;
• technical compatibility.

Therefore, bundling should be examined on the basis of its actual procurement objective and competitive effects.

18. Proportionality as the Central Principle

A useful analytical framework is:

Step 1 — Identify the procurement objective

What legitimate purpose does the restriction serve?

Step 2 — Identify the affected competitors

Which potential suppliers are excluded?

Step 3 — Determine the competitive effect

Does the requirement:

• reduce the number of bidders?
• favour incumbents?
• prevent foreign entry?
• exclude SMEs?
• reinforce a dominant supplier?

Step 4 — Examine alternatives

Could the objective be achieved through a less restrictive condition?

Step 5 — Examine duration

Is the restriction temporary or permanent?

Step 6 — Examine market structure

Does the restriction operate in a market already characterised by:

• few suppliers;
• high concentration;
• high switching costs;
• network effects;
• substantial entry costs?

Step 7 — Consider public-interest justification

Relevant considerations can include:

• national security;
• health;
• environmental protection;
• reliability;
• continuity of essential services.

19. Relationship Between Market Access Barriers and Bid Rigging

The relationship can be represented as:

High entry barriers
↓
Few qualified bidders
↓
Repeated interaction among incumbents
↓
Greater opportunity for communication
↓
Potential coordination
↓
Bid rigging / market allocation
↓
Higher procurement prices
↓
Reduced public value

The OECD specifically recognises that procurement rules themselves can sometimes unintentionally facilitate collusion and recommends maximising participation through transparent and non-discriminatory requirements.

20. Government Procurement and Competitive Neutrality

Competitive neutrality requires that competing suppliers not receive artificial advantages merely because of:

• government ownership;
• nationality;
• legal form;
• government affiliation.

The OECD's 2024 Competitive Neutrality Toolkit states that procurement conditions should be open, fair, non-discriminatory and transparent, allowing potential suppliers to participate on equitable terms.

This becomes especially important when:

State-Owned Enterprise + Government Procurement Authority + Regulatory Authority

are connected.

For example, if a state-owned enterprise competes in a tender conducted by another government entity while enjoying regulatory or informational advantages unavailable to private competitors, competitive-neutrality concerns can arise.

21. Remedies for Procurement Market-Access Barriers

A. Reduce unnecessary qualification requirements

Requirements should correspond to the actual contract.

B. Use functional specifications

Instead of specifying a particular technology, describe the required performance where feasible.

C. Divide large contracts into lots

This can facilitate SME participation.

D. Reduce unnecessary financial guarantees

Bid security should be proportionate.

E. Improve procurement transparency

Tender opportunities should be:

• easily searchable;
• timely;
• publicly accessible;
• machine-readable where appropriate.

F. Permit equivalent technologies

Technical specifications should generally avoid unnecessarily excluding substitute technologies.

G. Prevent discriminatory treatment

All bidders should receive materially equivalent procurement information.

H. Use electronic procurement

Electronic systems can lower participation costs and improve transparency.

I. Monitor bidder concentration

Authorities should monitor:

• number of bidders;
• repeated winners;
• identical pricing;
• geographic allocation;
• suspicious subcontracting;
• withdrawal patterns.

J. Competition-law enforcement

Where conduct crosses from structural restriction into anti-competitive behaviour, competition authorities may investigate under applicable competition legislation.

22. Six-Core Case-Law Principles

23. Key Legal Distinction

A very important distinction for examination purposes is:

Not every procurement barrier is a competition-law violation.

A procurement restriction may belong primarily to:

Procurement Law
→ legality of tender conditions

Competition Law
→ anti-competitive agreements, abuse of dominance

Administrative Law
→ arbitrariness, proportionality, equal treatment

Trade Law
→ discrimination against foreign suppliers

State-Aid/Subsidy Law
→ preferential treatment or subsidisation

Sector Regulation
→ safety, security, technical or professional requirements

A sophisticated competition-law analysis therefore asks which legal regime governs the particular barrier and whether the restriction has an identifiable competitive effect.

24. Conclusion

Public procurement market access is an important competition-policy issue because the competitive process begins before bids are submitted. If procurement rules unnecessarily exclude suppliers, competition may already have been weakened before price competition begins.

The principal concerns are:

1. excessive qualification requirements;
2. discriminatory technical specifications;
3. disproportionate financial requirements;
4. incumbency advantages;
5. geographic or nationality restrictions;
6. restricted procurement information;
7. excessive contract bundling;
8. discriminatory access to procurement platforms;
9. preferential treatment of state-owned enterprises; and
10. barriers that facilitate bid rigging.

The case law from the CJEU demonstrates the importance of proportionality, equal treatment, transparency and objective justification, while Excel Crop Care demonstrates the Indian competition-law response to collusive tendering. The OECD framework similarly emphasises maximising participation while designing procurement systems that minimise opportunities for collusion.