According to a decision issued by the Finnish Competition and Consumer Authority (FCCA) on 28 September 2020, Veikkaus Oy did not comply with the Act on Public Procurement and Concession Contracts when making material changes to the procurement contract of the central gaming system.
The FCCA began investigating Veikkaus’s procurement of the central gaming system at the same time as it entered public debate in January 2020. Veikkaus and IGT had initially concluded a contract in 2004 on the development and procurement of the central gaming system. In 2018, the parties changed the operating model for service provision, pricing and the duration from the original wording as specified in the procurement contract.
In its investigations, the FCCA stated that material changes had been made to the procurement contract, for which no exemption grounds existed under the Act on Public Procurement and Concession Contracts. Neither were there any legal grounds for direct procurement. Therefore, according to the FCCA, the procurement by Veikkaus of the central gaming system was illegal.
Veikkaus justified the contractual changes made with a need to break down and reform the system as a whole in a controlled manner, for example.
"While the objective of Veikkaus is to reduce supplier dependence and to subject subsystems to competitive tendering is to be welcomed by itself, the selected method did not comply with the Act on Public Procurement and Concession Contracts,” says Senior Specialist Elisa Aalto.
FCCA draws Veikkaus's attention to compliance with the Act on Public Procurement and Concession Contracts
Regarding the matter, the FCCA decided to provide Veikkaus with administrative guidance on compliance with procurement legislation. The Agency could not consider a proposal to the Market Court to impose sanctions because the time limit for the Market Court proposal had expired. According to the Act on Public Procurement and Concession Contracts, the FCCA must initiate investigative measures within six months of the conclusion of an unlawful direct procurement contract in order to enable a Market Court proposal.
"There are problems associated with the six-month time limit in terms of effective procurement control. In practice, the time limit means that the FCCA must find information on suspecteddirect procurement within six months of the conclusion of the contract,” says Max Jansson, Head of Research on Procurement Supervision.
"Finding a direct procurement or a contract change in time is not possible in practice, for example, in situations where six months is waited after contract changes that violate the Act on Public Procurement and Concession Contracts are made before the implementation of the actual procurement is started”, says Jansson.
In 2017, the FCCA was tasked with supervising public procurement. This is the first time that the FCCA intervenes in public procurement of a state-owned company.
Head of Research Max Jansson, tel. +358 29 505 3688
Senior Specialist Elisa Aalto, tel. +358 29 505 3683
Under the Act on Public Procurement and Concession Contracts, the Finnish Competition and Consumer Authority is tasked with supervising compliance with the legislation on public procurements. For a detected violation, the FCCA can issue an admonition to the contracting entity or provide the contracting entity with other form of administrative guidance referred to in the Administrative Procedure Act. With regard to illegal direct awards, the FCCA can, by virtue of the Act on Public Procurement and Concession Contracts, prohibit the implementation of the award decision. In the case of direct awards exceeding the EU threshold values, the FCCA can also submit a proposal to the Market Court to impose sanctions such as a penalty fine, shortening of the contract period or quashing of the procurement decision. The same provisions also apply to service procurements and concession contracts referred to in the Act on Public Procurement and Concession Contracts, which exceed the national threshold values and have been concluded as direct awards without justification provided by law. However, a proposal to the Market Court cannot be made if the contracting entity has submitted a direct procurement notice of the procurement as referred to in the Act on Public Procurement and Concession Contracts.