WRITTEN QUESTION E-3080/02

by Erik Meijer (GUE/NGL) to the Commission

(28 October 2002)

Subject: Financial negotiations instead of conviction for fraud in the building sector to prevent the firms concerned from being excluded from the EU market

1. Is the Commission aware of the cases of fraud committed by large construction companies in the Netherlands, who agreed among themselves on sharing out the execution of government contracts and who also agreed on common prices, a fraud that has since led to a national parliamentary inquiry?

2. Is the Commission also aware that in the case of fraud in the construction of railway tunnel at Schiphol airport prosecution was bought off in an out-of-court settlement, in other words an agreement with the public prosecution service under which charges were dropped in return for payment?

3. Is it correct that firms convicted of reaching agreements of the kind described in paragraph 1, or of committing other types of fraud or failing to deduct social security contributions can be barred from European tender procedures?

4. Can it be assumed that, because of the threat of exclusion, out-of-court settlements are used to protect large Netherlands companies against their competitors in other Member States, who could invoke a conviction as grounds for requesting the exclusion of their Netherlands competitors?

5. Are there other instances of Member States protecting their firms against exclusion at EU level through procedures to avoid what would normally be expected to be a conviction?

6. To what extent, if any, is it possible to take action in advance or after the event to exclude firms which have not been convicted for infringing tender rules solely on the grounds of a national judicial procedure from the European market for a certain period of time?

7. What measures are being taken to ensure that in the future it is no longer possible to avoid exclusion by means of an out-of-court settlement with a government that is well disposed to the firm suspected of fraud?

Answer given by Mr Monti on behalf of the Commission

(6 December 2002)

1. The Commission is aware of the many cases of (alleged) fraud in the construction market in the Netherlands through the national competition authority, NMA, and the media. In fact, the Member of the Commission in charge of the Internal Market testified before the Dutch Parliamentary Enquiry Committee concerning the building sector on 28 June 2002 and provided additional written information.

2. Through the media, the Commission has become aware of this event.

3. It is correct that the European Directives relating to public procurement, and more specifically their rules concerning the qualitative selection of tenderers, foresee i. a. that a service provider, supplier or contractor may be excluded from participation in a contract if he has been convicted of an offence concerning his professional conduct by a judgement which has the force of res judicata or if he has not fulfilled obligations relating to the payment of social security contributions in accordance with legal provisions.

4. The Commission possesses no elements which would enable it to share the assumption made by the Honourable Member. In any case, an out-of-court settlement does not protect companies from their possible exclusion from an European-wide tendering procedure, as the rules mentioned at point 3 equally foresee that a service provider, supplier or contractor, who has been guilty of grave professional misconduct proven by any means which the contracting authorities can justify, may be excluded from participation in a contract.

5. As mentioned at point 4, Member States cannot protect companies from their possible exclusion from an European-wide tendering procedure by an out-of-court settlement, as the European Directives relating to public procurement, which apply in all Member States, foresee the possible exclusion on grounds of professional misconduct proven by any means which the contracting authorities can justify.

6. As mentioned at point 4, the Community Directives relating to public procurement foresee that a service provider, supplier or contractor, who has been guilty of grave professional misconduct proven by any means which the contracting authorities can justify, may be excluded from participation in a contract.

7. In the light of the above, it is not necessary to take any supplementary measure.