Kossovics: Both Procurement Organisers and Businesses Can Be at Fault in Cartel Cases

Riga City Council deputy, deputy leader of the Progressives faction and entrepreneur Martins Kossovics said on the TV24 programme "Preses klubs" that cartels in Latvia cannot be viewed from one side only. In his view, both the conduct of state and municipal bodies in public procurement and the relations among businesses themselves need scrutiny. The topic has become especially relevant in Latvia lately, as the Competition Council, the authority that oversees fair competition in the market, is paying increasing attention to agreements among companies and to competition conditions across various sectors.

"The medal has two sides"

Kossovics welcomes the Competition Council's recent activity. At the same time, he stresses that, on one hand, the question is how fairly and openly state and municipal procurements are designed, and whether their requirements restrict competition. On the other hand, there may be cases where entrepreneurs agree among themselves on taking part in tenders, on prices or on dividing up the market. He described the situation by saying: "That medal has two sides."

According to Kossovics, publicly available information about the recently uncovered cartel suggests that in some cases companies may have coordinated their actions in procurements in advance, including the prices they offered.

Technology and hard-to-detect agreements

Kossovics believes artificial intelligence and data analysis tools could help spot suspicious public procurements much faster. They could identify so-called red flags, such as unusual requirements in tender documents or repeat bidders.

In his view, it is much harder to uncover informal agreements among entrepreneurs. He said companies are quite adept and try to get around competition rules. Such agreements may concern not only prices but also the division of the market or of specific procurements among competitors.

Therefore, Kossovics argues, it is not enough to check only whether the public sector prepared a tender fairly. It is equally important to establish whether bidders genuinely compete with each other, rather than having agreed beforehand who will win a given tender.