Old school antitrust infringements are not dead - continued compliance efforts matter
This week the French Competition Authority announced that it has fined an association of architects €1.5 million for fixing prices in the market for management of public works. The association imposed a pricing scheme for architects when responding to tenders for public works contracts. The scheme included a monitoring system and retaliation measures for those who refused to comply. The association also dissuaded public contracting authorities from contracting with architects whose fees were considered “too low”.
From a legal perspective, this development is not particularly interesting because the conduct described is textbook anticompetitive conduct. It does, however, serve as a reminder that old school infringements of the competition rules still occur!
Whilst we are all busy grappling with the impact of new technologies and new means of collusion, we shouldn't forget about compliance efforts for more traditional breaches.
The anticompetitive practice by the association of architects
When acting as managers of public works, architects are entrusted, by a public authority, with a project but are free to set their own prices. However, since 2013, several regional councils of the association of architects were circulating a pricing model in order to fight alleged dumping practices by architects, whose fees were “too low”. The pricing model was published in a guide to help public authorities calculate their estimated budget for public works. Simultaneously, architects were encouraged to set their fees within the recommended pricing ranges without taking into account their actual costs.
In order to ensure architects respected the pricing model, the association set up several retaliation measures, among which was a standardised referral procedure for non-abiding architects before regional disciplinary boards. Architects were thus encouraged to report their colleagues for offering low prices. The association also alerted public contracting authorities of the legal and technical “risks”, if they negotiated excessively low prices with architects.
The FCA considered these practices to be a serious breach of the competition rules, particularly taking into account that they were set up and implemented by a public body entrusted by both its members and public contracting authorities.