Introduction
The legal framework for public procurement was overhauled with the coming into force of the Procurement Act 2023 (the "Act"). An important change brought into force on 24 February 2025 is the introduction of new mandatory exclusion grounds in relation to certain anti-competitive conduct, alongside new discretionary exclusion grounds in relation to additional and potential competition law issues. The Act extends the scope of the exclusions for anti-competitive conduct. Consequently, it is important that current and prospective procurement suppliers understand the serious implications that could stem from a failure to comply with competition law.
Who needs to be concerned about these exclusion grounds?
The scope of the exclusions and the debarment regime discussed below is not limited to the supplier itself. Certain grounds can extend to individuals and entities who are associated with or connected to the supplier in question:
- An associated person is a person that the supplier is relying on in order to satisfy the conditions of participation in the tender (other than a guarantor).
- A connected person is a person with significant influence or control over the supplier, or over whom the supplier has significant influence or control; this might include, (for example), directors or a parent or subsidiary company.
There are also related rules to ensure vetting of subcontractors in the supply chain on whom the supplier intends to rely upon if awarded the tender.
Mandatory exclusions
When a mandatory exclusion ground is met, that supplier must be excluded from participation in a procurement, having their tender considered or being awarded a public contract – if the circumstances giving rise to the exclusion ground are continuing or likely to occur again (such that the supplier has not 'self-cleaned' as explained further below).
There are effectively two mandatory grounds in the exclusion and debarment regime which directly concern competition law compliance. The first applies where a supplier or connected person has been convicted of the criminal cartel offence under section 188 of the Enterprise Act 2002 – or an equivalent overseas offence. Subject to limited exclusions and defences, an individual commits the section 188 offence if they have formed an agreement with at least one other person that two or more undertakings will engage in price fixing, market sharing, bid-rigging (a particular concern in procurement regulation) or to limit output. An ancillary offence to such a criminal cartel offence (eg aiding, abetting or conspiring) can also amount to a mandatory ground.
The second mandatory ground applies where a supplier or connected person has been found by the CMA to have participated in a cartel contrary to chapter I of the Competition Act 1998 – or a concurrent regulator has found an equivalent infringement under equivalent legislation outside of the UK. Subject to limited exceptions, chapter I of the Competition Act 1998 prohibits agreements between undertakings, decisions by associations of undertakings, or concerted practices which may affect trade within the UK and which have as their object or effect the prevention, restriction or distortion of competition within the UK. However, the mandatory ground is limited to a finding of participation in a cartel (ie it does not cover just any unlawful agreement or concerted practice). The inclusion of certain overseas competition law infringements in this mandatory ground broadens the scope of the exclusion and debarment regime significantly, and is of particular note to businesses that have international ownership or operations.
Notably, this ground does not apply where the relevant undertaking was granted immunity from a penalty under a leniency programme, and in some circumstances this may therefore provide a participant in a cartel with an added advantage of 'blowing the whistle' to a regulator.
Discretionary competition law grounds
Under the Public Contract Regulations 2015, there was already a discretionary exclusion ground where a contracting public authority had "sufficiently plausible indications" of anti-competitive agreements. The discretionary grounds in relation to anti-competitive behaviour have now been expanded. A discretionary ground applies if the supplier or a connected person:
- is party to an agreement or concerted practice which infringes chapter I of the Competition Act 1998;
- has infringed the prohibition on abuse of a dominant position in chapter II of the Competition Act 1998;
- has engaged in conduct constituting the criminal cartel offence contrary tosection 188 of the Enterprise Act 2002;
- has infringed a substantially similar competition law prohibition to those described in (a)-(c) in an overseas jurisdiction.
These discretionary grounds do not apply where the relevant person has been granted immunity from penalties in respect of the alleged infringement. The discretionary grounds cover a much broader array of competition law issues than the mandatory competition grounds: potential as well as actual infringements (ie suspected infringements) and decisions establishing an infringement of chapter I of the Competition Act 1998 other than by participation in a cartel or an infringement of chapter II of the Competition Act 1998 (and equivalent overseas decisions).
Debarment list
In a significant change, the Act introduced a debarment list. A Government Minister can pre-determine that, because a mandatory or discretionary ground has been met, that a supplier should be included on a central debarment list for up to five years. If the reason for a supplier being included on the debarment list is because of a discretionary ground, then the contracting authority is not obligated to exclude the tenderer but "may" choose to.
Self-cleaning
As above, if a contracting authority decides that a ground applies, then the supplier could still try to demonstrate that it has 'self-cleaned'. This means demonstrating that circumstances giving rise to the ground are not continuing or are unlikely to occur again. There is interplay between 'self-cleaning' and an application for leniency from a competition authority; however the precise detail of that interplay remains unclear. The CMA's website at the time of writing indicates that further guidance will be published that will touch upon such issues: "the CMA will provide additional guidance on the interplay between the new procurement regime and the CMA's leniency regime in the CMA's consultation document and draft leniency guidance to be published shortly".
Look-back period
The look-back period when assessing the grounds is five years (albeit there are also some discrete transitional rules on time periods).
Comment
All businesses should already be aware of the importance of compliance with competition law given the potential severity of its penalties. Following the introduction of the Act, businesses that seek to participate in UK public procurement have an even greater responsibility to monitor their own compliance with UK and international competition laws (and compliance of connected persons).