This document discusses competition issues that can arise with concession contracts for markets like toll roads, ports, and public transport. It covers: 1) How concession bidding processes can be abused through exclusionary practices that disadvantage rivals or exploitative excessive pricing. 2) How merger reviews may use remedies to foster competition, such as funding rivals' bidding costs or requiring early contract terminations. 3) Risks of coordination in concession markets with few competitors and infrequent tenders. 4) Interactions between competition law and laws governing concession tendering and regulation. Proper enforcement of concession contracts is important for competition.

1. Competition for the market:
Enforcement issues with concession contracts
OECD
Global Forum on Competition
Paris, 6 December 2019
Rory Macmillan
MACMILLAN KECK
ATTORNEYS & SOLICITORS

2. Contents
• Competition for and in the market
• Bidding processes and abuse of dominance
• Merger enforcement and remedies
• Cartel enforcement
• Competition enforcement and the delegating authority
• Competition enforcement and the concession framework

3. Competition for and in the market
• “[T]he grant of a licence for the exploitation of a particular State-
regulated activity is distinguishable from the running of that particular
activity” (Lyonnaise des Eaux/Northumbrian Water)
• For example, in the case of toll roads, there may be:
• a market for the grant of the toll motorway concession
• may include several operators internationally
• weak competition may result in higher subsidies
• a market for provision of the toll motorway to drivers under the concession
• may be specific to the geographic route
• drivers may have no alternative road or rail as substitute
• lack of competition may result in poorer quality road maintenance, traffic at toll booths

4. Bidding processes and abuse of dominance
• Can potentially deal with sunk costs, assets, IP, even personnel through
transfer, but difficult to deal with knowledge advantage
• Exclusionary practices
• Société Nationale maritime Corse Méditerranée (Marseille–Corsica maritime
transport, France) – SNCM’s global indivisible bid on all network lines instead of each
individual line excluded rival bids
• Puerto Nuevo (coal export port, Colombia) – proposed port capacity sufficient only
for concessionaire’s downstream needs, excluding competing users
• EMS – Albanian Port Operator (ports, Albania) – vertically integrated port operator
and provider of stevedore services discriminating against downstream stevedores
• Exploitative abuse
• Bodson v Pompes funèbres libérées (funeral services, France); Santiago (airport
terminal, Chile) – excessive pricing

5. Merger enforcement and remedies
• Diminished competition for concessions
• Potential efficiency gains
• Using merger conditions to foster competition for the market
• Veolia Transport / Transdev (urban transport, France) – fund to indemnify
competitors’ bidding costs
• GDF Suez/Ne Varietur (local authority heating networks, France) – early
termination by acquired group of concessions (akin to divestment)

6. Cartel enforcement
• Risks of coordination
• Usually small number of competitors for concessions
• Potential in tender processes for extensive exchange of information
• Detection difficult – infrequent tenders produce less data patterns
but…
• Infrequency and often-unique nature of concessions makes
coordination and rules of mutual compensation more difficult except
• concessions for multiple lots
• multimodal concession operators active in multiple markets

7. Competition law enforcement and the
delegating authority
• Arriva v Luton Airport (bus services, UK) – exclusive bus concession from
airport an abuse of dominance distorting downstream market
• Cali & Figli v Servizi ecologici porto di Genova SpA (pollution control, Italy) –
monitoring pollution typically the exercise of public authority, not a
commercial activity, so not an ‘undertaking’ subject to the Treaty
• Ambulanz Glöckner v Landkreis Sudwestpflaz (emergency patient transport
services, Germany) – services are a generally a commercial activity
• Increasing application of competition law principles to concessions
• EU Concessions Directive
• National laws

8. Competition enforcement and the concession
framework
• Interaction between
• competition laws
and
• laws and rules governing the tender process, concession contract, sector
regulations
• Echoes of treatment of sector regulation in Deutsche Telekom (e.g.,
SNCM Corsican ferry case)
• Enforcement of the contract is vital to integrity of competition for the
market