2019.07.25 16:57

Suspected cartel agreement among Microsoft software suppliers in Lithuania

Competition authorities are targeting suspected competition-stifling agreements among Lithuania's software sellers. Observers say action is long overdue, as the same handful of firms have been winning public procurement contracts for years.

This month, the Competition Council has visited the offices of three software suppliers, LRT TV has learnt. They are suspected of secret agreements for supplying public institutions with Microsoft software.

LRT TV reports that a handful of big software suppliers account for a third of the public procurement market and take in about €113 million of guaranteed income a year.

Sometimes the big companies set up smaller firms to imitate competition.

One company, Blue Bridge, has confirmed it was visited by Competition Council inspectors.

Šarūnas Kaserauskas, the head of the authority, has not commented on the extent of the alleged cartel nor whether it includes Microsoft Lietuva, the representative of the US software maker.

LRT TV's sources say that the Competition Council is looking into at least six public procurement contracts worth between €10 and €20 million. They involved state-owned companies and public bodies – the Government Chancellery, Vilnius Energy, the Customs Department among others – purchasing and upgrading Microsoft software.

The Public Procurement Office has raised the issue before, saying that the safeguards in the public procurement law simply do not work for the technology sector, and that many calls for tenders end up receiving a single offer.

Moreover, if a company wins the contract to install an IT system, it almost invariably secures all the subsequent ones for its upgrades.

“In some areas, the choice is among only a few companies. They are the representatives licensed to sell this or that piece of software – so they are the only ones who can make the offer and dictate their terms,” says Diana Vilytė, the director of the Public Procurement Office.

A solution could be centralising software procurement under one public body, says Tautvydas Banelis, director for IT systems at the Lithuanian Customs. A central IT service centre could deal directly with the giants like Microsoft or Oracle, eliminating the need for mediators, he says.