The National Court confirms the fines for two consultancies of the cartel that manipulated public tenders throughout the State, also in the Balearic Islands

PalmaThe National Court has confirmed the sanctions imposed by the National Commission on Markets and Competition (CNMC) on Regio Plus Consulting and Hidria, Ciencia, Ambiente y Desarrollo, two of the companies that participated in a cartel aimed at manipulating public tenders for at least a decade. The consultancy firms will have to pay 33,744 and 11,979 euros, respectively, fines imposed by the CNMC in 2021.

The judicial resolution focuses on a specific case involving Calvià 2000 that dates back to December 2016. According to the ruling, several emails exchanged between Regio Plus and Hidria constitute direct evidence of coordination between the companies to prepare their bids for a tender intended to contract a consultancy service to prepare the documentation for the Integrated Sustainable Urban Development Strategy (EDUSI). The National Court considers these messages explicit enough to rule out any interpretation other than "according to the tender".

The emails that evidence the coordination

On December 22, 2016, Hidria forwarded to a Regio Plus representative the invitation from Calvià 2000 to participate in the procedure. In the message, the Hidria employee asked for instructions on how to act: “Master Garau! Tell me what you want to do with this... so I can organize myself”. The next day, a manager from Regio Plus sent an internal email attaching a document titled ‘EDUSI Calvià-Hidria Proposal’. The message explained that he had prepared a proposal to be forwarded to Hidria and indicated that this company had to complete the necessary administrative documentation to submit its bid.

The communication, according to the judgment, shows that Regio Plus not only knew about Hidria's participation, but also prepared part of the documentation so that it could submit its offer. In another internal email, also from December 2016, a Regio Plus manager warned about the submission deadlines of the other companies and proposed contacting Hidria: “The problem is that perhaps the other two companies might not be operational on the 29th, to send the email themselves. You can talk to Geronimo from Hidria”. For the National Court, these communications evidence the familiarity between companies that, on paper, were competitors, as well as the shared knowledge about how the practice worked. The judgment highlights especially the “tacit understandings of the operational mechanics”, which, according to the magistrates, prove that these types of actions were not isolated, but habitual and repeated.

How the cartel worked

The Calvià 2000 case fits the system that the CNMC accredited in its investigation. Between 2008 and 2018, several consultancies organized themselves into two collaboration networks –one northern and one national– to coordinate on public tenders.

The mechanism often consisted of so-called "cover bids". A company interested in obtaining a contract would contact other consultancies in its network to submit a losing bid or refrain from participating. In some cases, according to the CNMC, the same company that intended to obtain the contract prepared the proposals of its supposed competitors. In this way, companies reduced real competition in the tenders and increased the chances that a specific consultancy would end up being awarded the contract. The CNMC analyzed 200 public contracts corresponding to the investigated period and accredited irregular practices in at least 101 tenders linked to the northern network and 72 to the national network.

The Calvià 2000 contract

The procedure affected in Calvià had the objective of contracting an advisory service to prepare the documentation related to the DUSI strategy. Finally, the contract was awarded to Consultors de Polítiques Comunitàries (CPC) for an amount of 16,900 euros. CPC was managed by Jaume Garau, who was responsible for an electoral campaign of MÉS per Mallorca and who was subsequently involved in the 'Contractes' case, which ended up being archived.

When the case generated political and media controversy, the Calvià City Council defended that the procedure had been developed in accordance with legality. In a 2017 statement, the Council pointed out that there was no corporate link between the invited companies and that no other type of relationship between them was recorded either. Now, however, the National Court considers the coordination between several of these companies to be proven. The ruling points out that the analyzed emails, both those related to Calvià and other communications incorporated into the file, constitute direct proof of the consultants' participation in the infringement.

The Court confirms the sanctions

The resolution of the National Court, published last July 10, thus confirms the responsibility of Regio Plus Consulting and Hidria in the practices sanctioned by the CNMC. The regulatory body had imposed in 2021 fines totaling 5.87 million euros on 22 consulting firms, in addition to 439,000 euros on several of their executives. Among the sanctioned companies were some of the main firms in the sector, such as Deloitte Consulting, Idom Consulting, and PwC. The CNMC considered that the actions constituted two very serious infringements of the Competition Defense Law and Article 101 of the Treaty on the Functioning of the European Union.

For the organization, the manipulation of public tenders is especially harmful because it directly affects the resources of the administrations. Coordination between companies can lead to higher prices, less competition, and lower quality of services contracted with public money. The ruling of the National Court reinforces this conclusion and considers the Calvià 2000 case to be an example of the “high level of coordination” existing between the cartel companies to avoid, whenever possible, having to truly compete to obtain public contracts.