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AdC sanctions cartel in hospital tenders


AdC sanctions cartel in hospital tenders

médico analisando radiografias

Press release 02/2024
January 15, 2024

The AdC has fined five companies with a total fine of  €6,889,300 for engaging in a cartel related to public procurement for teleradiology services to hospitals and hospital centers across Portugal, in the context of the case labelled as PRC/2021/3.

The investigation
Faced with indicia of a practice restricting competition in the aforementioned public tenders, the AdC ordered the opening of an investigation, and in September and October 2021, it carried out unannounced inspections in order to obtain evidence of the behavior in question.
The AdC's investigation revealed that the five companies jointly defined which companies would submit the winning bids in public procurement procedures for the provision of teleradiology services, thereby misleading the results of the tenders.
The companies involved in the cartel agreed among themselves on the prices they would bid in the future, in order to guarantee that the best bid would come from the company they had defined. They also agreed that the others would be excluded from the tender as a result of submitting bids that did not fulfil eliminatory criteria.
The contacts established allowed the companies involved to divide up the national market for the provision of teleradiology services and to implement strategies aimed at a general increase in prices in the market, damaging the contracting hospitals and hospital centers.

Teleradiology Services
Teleradiology enables diagnostic examinations in healthcare establishments without the physical presence of a radiologist or neuroradiologist. Specialist doctors remotely interpret diagnostic test results, providing reports to the healthcare establishment. This service, crucial when local healthcare lacks specialized radiology teams, is used by companies servicing the Portuguese National Health System through public procurement.

The process
Two of the companies involved decided to collaborate with the AdC and agreed to the settlement procedure before the final decision. By doing so, the companies recognize their participation in the cartel, voluntarily pay the fine and forgo legal litigation, concluding the case and benefiting from a reduction in the fine.
As for the remaining three companies, the AdC issued the Statement of Objections in November 2022, having given all the companies the opportunity to exercise their rights to a hearing and defense, which was duly taken into account in the final decision.

The fines
The total value of the fines imposed in this final decision amounts to €6,889,300.00, with €5.038.200,00   and €202,300.00 corresponding to the penalties imposed on the two companies that joined the settlement procedure.
The fines imposed by the AdC are determined by the turnover of the sanctioned companies in the affected markets in the years of the practice. In addition, according to the Competition Law, the fines may not exceed 10 per cent of the company's turnover in the year prior to the sanction decision.
When setting fines, the AdC takes into account the seriousness and duration of the infringement, the degree of participation of the companies, the economic situation of the companies, among other circumstances, in accordance with international best practice (see AdC Guidelines on methodology to be applied when imposing fines).

Inhibition from participating in public procurement procedures
In view of the seriousness of the infringement and the need to prevent this type of practice, the AdC also imposed an ancillary sanction on the three companies now sanctioned.
The sanction prohibits the companies from taking part, for a period of one year, in public procurement procedures whose purpose includes the provision of teleradiology services, in all or part of the national territory.
The AdC's sanctioning decisions may be appealed to the Competition, Regulation and Supervision Court. The appeal does not suspend the execution of the fines.

Prioritising the fight against cartels
The fight against cartels, particularly in the field of public procurement, has top priority for the AdC, given the damage they invariably cause to families, consumers and, in this case, the state, forcing it to pay higher prices and reducing the quality and diversity of the goods and services available to it.
Breaches of competition rules not only reduce consumer welfare, but also harm the competitiveness of companies, penalising the economy.