Budapest, 19 December 2024 - According to the recently completed accelerated sector inquiry by the Hungarian Competition Authority (GVH), the share of single-bid public procurements has decreased in both the overall Hungarian public procurement market and the market for diagnostic medical imaging equipment between 2021 and 2023. This is in line with the Government's commitments to the European Commission. In the draft report submitted for public consultation, the GVH's experts also made proposals to further reduce the number of single-bid public procurement contracts. The GVH will soon launch accelerated sector inquiries in other public procurement markets.
Given its mandate, the Hungarian Competition Authority (GVH) pays particular attention to public procurements. One of the most important tasks of the national competition authority is to promote the fair use of public money by preventing, detecting and dismantling public procurement cartels. In addition to cartels, single-bid public procurements can also be a major problem. In all cases, including public procurement, intense competition between a number of players leads to lower prices. However, in the absence of competitors, bidders are free to set their own prices, undermining the efficiency of the use of public resources and jeopardizing the public interest.
In early 2023, the Government of Hungary adopted an action plan on measures to increase the level of competition in public procurements (2023-2026). One of the main objectives of the Government is to significantly reduce the share of single-bid public procurement in Hungary, thereby also fulfilling the commitments made to the European Commission. In Government Decision No 1082/2024 (28.3.2024) on the revision of the Action Plan, the Government asked the President of the GVH to ensure that three sector inquiries are carried out to identify the causes of single-bid public procurements.
The GVH identified a total of three public procurement markets where it considered it reasonable to open investigations. The first of these - on 24 September 2024 - was the diagnostic medical imaging equipment, where the national competition authority opened an accelerated sector inquiry, focusing on the procurement of imaging equipment, i.e. MR, CT, UH and radiology equipment.
In the course of the investigation, the national competition authority carried out unannounced inspections at some of the major players in the domestic market for diagnostic imaging devices and at the largest domestic advocacy organisation. The GVH requested written submissions from a large number of domestic companies active in the production or distribution of diagnostic imaging devices and a number of domestic public and private healthcare operators. It also contacted the Public Procurement Authority and the National Development Centre and mapped relevant international practices.
Overall, the GVH concluded that the market for diagnostic imaging devices has also been affected by measures aimed at reducing the number of single-bid procurements: the number of single-bid procurements has decreased, while the prior declaration of the ineffectiveness of single-bid procurements (as an optional alternative) and the conduct of prior market consultations have become standard market practices.
The GVH found that the Public Procurement Authority has stepped up its monitoring activities in line with the action plan of the medium-term National Anti-Corruption Strategy 2024-2025, which also had a positive impact on reducing single-bid procurements.
The GVH's experts have also made recommendations to further reduce the number of single-bid procurements.
The GVH recommends contracting authorities to
- in the case of requests for a package offer, the possibility to make split bids for diagnostic imaging equipment if the package includes the purchase of diagnostic imaging equipment;
- more meaningful involvement of market players and their representative organisations in the pre-procurement phase, with an emphasis on transparent, documented ways of ensuring compliance with conflict of interest, integrity and competition rules;
- the prior market consultation of potential bidders in public procurement procedures, as well as the use of the determination of its ineffectiveness in the case of less than two bids.
The GVH recommends that public authorities with control powers over the domestic public procurement market should maintain
- increased scrutiny of the justification and legal compliance for bundling involving diagnostic imaging devices in case of package requests; and
- enhanced monitoring of the legal obligations of contracting authorities to carry out pre-market consultations.
The draft report on the results of the sector inquiry has been made available for public consultation on the GVH's website. Market participants have one month, until 19 January 2025, to submit written comments. After the deadline, the national competition will publish the report on the results of the sector inquiry, a summary of the comments received and, if requested, the full text of the comments on its website. The draft report of the sector inquiry is available at this link.
GVH Public Service Communications Section
Further information:
Bálint Horváth, Head of Communication +36 20 238 6939
Katalin Gondolovics, Spokesperson +36 30 603 1170