Outdoor advertising Patrik Ducrey, Deputy Director of the Competition Commission, on the unresolved problem of poster concessions.
WW: Three years ago, the Competition Commission (Weko) recommended that municipalities put poster concessions out to public tender. Did this recommendation make a difference? Patrik Ducrey: We haven't looked into this any further. But we assume that a recommendation will also prompt poster companies to complain to us if such a contract is not put out to public tender. This is exactly what happened in Lucerne.
In Basel, however, the Administrative Court has just ruled that an invitation to tender is only mandatory if street furniture is procured in return for the award of the concession. However, if - as in Basel and Lucerne - only financial compensation is required for the concession, no invitation to tender is necessary. The court based its decision on
to a 1999 Federal Supreme Court ruling concerning the city of Geneva.
However, it seems to me that the Basel court has gone one step further than the Federal Court did at the time. The latter had merely confirmed that the municipalities were not obliged to put such concessions out to tender. It justified this by stating that the awarding of public poster sites was essentially a matter of concession income and not actual procurement. And even if the concession income was provided in the form of street furniture, this was not the same as a direct purchase of this furniture for a fee. In our opinion, however, the Federal Court was not very correct there. In any case, we cannot understand this distinction. And from a competition law perspective, tenders are of course still sensible. This is also the reason for our recommendation at the time, which we based not on public procurement law but on antitrust law.
A year and a half ago, the Competition Commission ordered the city of Lucerne to
was forced to issue an invitation to tender following an investigation. What was the legal basis for this?
We relied on the Cartel Act, which states that the abuse of a dominant market position is not permitted. We assumed that the city of Lucerne, as the awarding authority for this billboard concession on public land, was in a dominant market position at the time of the award. If it does not conduct a public tender in this situation, we believe that it is restricting or even preventing competition.
Would you have had a legal basis for an investigation when, according to the Federal Supreme Court, tenders for poster concessions
are voluntary?
That should have been left to chance. We are of the opinion that we could have enforced such a tender based on the Cartel Act. Ultimately, the Federal Supreme Court should have said how the Cartel Act and the Public Procurement Act relate to each other.
Assuming that the Competition Commission had initiated the investigation:
Would Lucerne then have been able to appeal to the Federal Supreme Court?
Not against the investigation itself. But if we had come to the conclusion that the city was in breach of antitrust law, it could have appealed first to the Competition Appeals Commission and then to the Federal Supreme Court.
Wouldn't a federal court clarification be desirable for all sides?
In principle, yes. But you also have to consider the time factor. It would take around three to five years to fight through to the Federal Supreme Court - probably too long a time span for the municipalities.
Does the court ruling in Basel offer an opportunity for this?
Perhaps. It also depends on whether the company in question takes the decision further.
What is the advantage of invitations to tender compared to the previous practice of municipalities not issuing invitations to tender or concluding so-called consortium agreements with several providers?
A submission has the advantage that other interested parties can submit their bids, concepts and offers. This is more transparent for all sides. And it can also lead to additional income for the municipalities.
However, the examples of Basel and Lucerne now show that tenders
of poster concessions tend to be disadvantageous for the municipalities: They are prone to complaints, cause long delays, high legal costs and result in a loss of revenue because the new concession agreements cannot be concluded.
Of course, because there is not yet a culture of this type of tender in the big cities. But if they become a habit, if they are carried out correctly and if the criteria are clearly formulated and properly applied in the decisions, the risk of a complaint is reduced.
Eternal dispute over concessionsCommunities in which a poster concession is about to be awarded,
must expect lengthy legal proceedings. In Lucerne
The disputes are entering their third year, and in Basel their seventh. Every year, the city of Basel loses out on around three million francs in concession income.
The delays on the Rhine bend are partly self-inflicted. A former member of the cantonal government slipped a concession to APG for 250 new illuminated billboards past the cantonal parliament, which led to building objections, a long political debate and years of uncertainty about the form of the remaining concession, which is now the subject of dispute (see p. 1). The situation is different in Lucerne. There, the building authorities wanted to renew the contract with APG without a tender, whereupon CCP filed a complaint with the Competition Commission.
Under pressure from the Competition Commission, the city then issued the tender in October 2003, which has now been suspended. In Lucerne, only one price offer is required. Bern showed that it can also be done without problems: after a problem-free submission, the contract was also awarded to APG uncontested (mk).
"Municipalities should put poster concessions out to public tender": Patrik Ducrey, Deputy Director of the Competition Commission.
Markus Knöpfli