Latvia introduces criminal liability for bid-rigging cartels in public procurement

Latvia is introducing criminal liability for prohibited agreements, or cartels, in public procurement. The amendments to the Criminal Law take effect on 15 October. They apply to people who organise or carry out such arrangements, for example by agreeing on prices or coordinating bids. Only large-scale procurements are covered. Until now, cartel participation was subject only to administrative liability. The changes were announced by the Saeima, Latvia's parliament.

Penalties

The Criminal Law is supplemented with Sections 211.1 and 211.2. Coordinating a bid or application with another market participant before submitting it to the contracting authority is punishable, as is agreeing not to submit one or agreeing on participation terms. The penalty is up to three years' imprisonment or short-term imprisonment. Probation supervision, community service, or a fine may also be imposed, together with a ban of up to three years on certain types of business, occupations or holding certain positions.

For a prohibited agreement in public procurement more broadly, the law provides up to five years' imprisonment, probation supervision, or a fine, with a ban of two to five years on such activities.

Exemption from liability

Section 211.2 allows a person to be released from criminal liability if they are the first to voluntarily report the offence and actively help uncover and investigate it. Coercive measures are not applied to legal entities for such agreements.

What counts as large scale

A new Section 20.2 in the law on the entry into force and application of the Criminal Law sets the threshold. Liability arises where the contract price, excluding value added tax, is at least 750,000 euros, or one million euros for a construction contract.

Administrative liability remains

Under the Competition Law, the Competition Council can fine market participants up to 10% of a company's net turnover in its last financial year. From the day the council's decision takes effect, the parties are barred from procurements for three years, even if the decision is appealed in court.