FIEC welcomes European competition proposals

By Helen Wright22 March 2012

President of the European Construction Industry Federation (FIEC) Luisa Todini has welcomed a proposal by the European Commission that would level the playing field when it comes to competing for business in the EU, describing it as a "step in the right direction".

Key aspects of the proposal would include allowing the Commission to restrict access to the EU market if a country outside the EU repeatedly and seriously discriminated against European suppliers. This could be achieved by excluding tenders originating in a non-EU country, or imposing a price penalty.

In addition, the Commission proposed excluding tenders for contracts above €5 million that comprise a significant part of foreign goods and services where these contracts are not covered by existing international agreements.

Finally, the proposal would increase transparency on abnormally low offers in order to combat unfair competition by non-EU suppliers on the European market.

Equal footing

FIEC has repeatedly called for measures that would ensure all companies (both European and non-European) are on an equal footing when it comes to competing for business in the EU's lucrative public procurement market.

The trade association was dismayed last year, for instance, when state-owned Chinese contractor China Overseas Engineering Group (COVEC) won a road building contract in Poland with a tender that was more than -50% lower than the government's budget for the project. The contract was subsequently cancelled and re-awarded to a European consortium, sparking a dispute.

FIEC said, "Recent experience in Poland shows that state-owned companies from third countries have attempted to drastically undercut competition from EU companies for major infrastructure projects with disastrous consequences. It is unacceptable that state-owned bidders are able to distort competition in the tender process through abnormally low tender prices only to turn round at a later stage and demand a higher price. This makes a mockery of the EU's single market."

And While Ms Todini welcomed the proposals, she said FIEC wanted the pace of progress to increase.

"The European construction industry considers that it is high time for the EU to give itself the means for promoting market opening in a more effective way than hoping for the good example set by the EU to convince our trade partners. The 'good example' approach has not produced any significant results for the construction industry," Ms Todini said.

Protectionism?

She warned that the EC proposal should not be confused with protectionism, rather as leverage for opening third country markets and trying to achieve more symmetric market access.

The EC said the main objective of the initiative was to help open worldwide public procurement markets and to ensure European businesses have fair access to them.

The EU's public procurement market is traditionally very open, but this is not always matched by a similar degree of openness from its trading partners. Worldwide, only a quarter of the world's procurement market is open for international competition.

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