• On paper it looks like a consortium, but in fact it is bid rigging.
• This fraudulent scheme was set up by six entrepreneurs involved in dropping rabies vaccine baits by aircraft to eradicate fox rabies.
• President of UOKiK imposed fines on such entrepreneurs totalling almost PLN 2.7 million.

Red foxes (Vulpes vulpes) are the main wildlife carriers of rabies virus. One of the most effective ways to fight this disease are vaccines dropped from planes to the foxes’ living quarters, such as forests and meadows. The Office of Competition and Consumer Protection passed a decision in which it stated that six entrepreneurs involved in the provision of such services had implemented a bid-rigging scheme. These entrepreneurs are: Airbus Poland (formerly PZL “Warszawa-Okęcie”) from Warsaw, Adriana Aviation from Watorowo, Aeroklub Podhalański from Łososina Dolna, Aeroklub Ziemi Lubuskiej from Zielona Góra, Blue Star and Gwiazda PPHU, both from Pruszcz Gdański.

Evidence obtained by UOKiK clearly shows that these entrepreneurs concluded an agreement in which they agreed the conditions of participation in bids for oral rabies vaccine bait drops organized by the Provincial Veterinary Inspectorates. They agreed that they would not compete against each other and would submit bids jointly. If any of them wanted to bid for a contract on its own or become a subcontractor of another entity, it had to obtain a consent from others. High contractual fines were provided for breaking these arrangements, even up to one million zlotys, says Marek Niechciał, President of UOKiK.

The agreement was valid in the years 2014-2015. In the first year, there were six entrepreneurs participating in bid rigging. In 2015, their number dropped to four, including Adriana Aviation, Aeroklub Podhalański, Aeroklub Ziemi Lubuskiej and Blue Star.

Collusion for more challenging times

When the collusive scheme was established, no cases of rabies were reported in some provinces, therefore local veterinary inspectorates did not call for bids. This meant less contracts and more intense competition for them.

The market was facing difficult times but instead of fighting for contracts, the entrepreneurs decided to collude. They agreed that they would not compete against each other and would share the profits. As a result, the Provincial Veterinary Inspectorates could have lost a lot of money as they paid more than they would have under normal conditions of competition. These institutions are financed from public funds, so the collusion adversely affected all taxpayers, says Michał Holeksa, vice President of UOKiK.

Losses suffered by the Provincial Veterinary Inspectorates could have been even greater as the collusive scheme was set up by the majority of entrepreneurs able to provide the service of oral rabies vaccine bait drops on their own. Collusion participants usually had only one competitor, i.e. a consortium of two other companies.

In 2014, colluding companies decided not compete against each another in all 12 bids organized by the Provincial Veterinary Inspectorates throughout the country. In 2015, they took part in nine out of 10 bids for dropping packets of rabies vaccine over wild areas.

Consortium is allowed, but...

Joint bids were submitted as part of a consortium. Competition law allows this form of cooperation, but if entrepreneurs are able to carry out a contract on their own, then cooperation with other entities may restrict competition. The same applies when it is possible to provide certain services with fewer entrepreneurs than those belonging to a consortium. In addition, arrangements between entrepreneurs, including the scope of contracts, may be so defined that an agreement they are a party to is in fact only a cover for bid rigging.

As far as the dropping of vaccines for foxes is concerned, some of the fined entities could bid for contracts individually, while others were able to do so with fewer consortium members. In this case, however, it is more important that arrangements made by these entrepreneurs clearly show that we were dealing with collusive bidding. I mean, for example, joint bids, refraining from competing or fines for breaking arrangements. As you see, what looks as a consortium on paper, may not prove to be so in reality, explains Marek Niechciał, President of UOKiK.

President of UOKiK imposed fines on six entities totalling nearly PLN 2.7 million* for participating in the bid rigging. The decision is not final and may be appealed against to the court.

If you know anything about a secret agreement in your former or current company, please notify UOKiK. The Office runs a programme aimed at obtaining information from anonymous persons aware of practices restricting competition. Go to https://konkurencja.uokik.gov.pl/sygnalista/ and use the simple form. The system we use guarantees that your identity will not be disclosed.

Fines imposed on individual collusion participants*

Airbus Poland: PLN 1 867 591.44

Adriana Aviation: PLN 277 216.79

Podhale Aeroclub: PLN 76,643.44

Aeroklub Ziemi Lubuskiej: PLN 420 556.03

Blue Star: PLN 144 235.53

Gwiazda PPHU: PLN 41 791.21

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL