Centralizing Public Procurement and Competitiveness in Directive 2014/24

Abstract

Centralized purchasing benefits contracting authorities and society in general as it may reduce purchasing prices and transaction costs, lead to administrative economies of scale, and help specializing procurement officers across Member States. Centralization techniques are also used to pursue broader economic goals, such as fostering innovation, create competitive markets and sustain development. Directive 2014/24 reinforces the impulse given to central purchasing bodies due its popularity and establishes two different types: either wholesalers/wholebuyers or intermediaries that carry out procurement on behalf of other contracting authorities. However, the competitive benefits that may be generated by centralization can also be eroded by its abuse and inadequate implementation, particularly when dynamic efficiency is jeopardized by focusing on pure cost-saving and short term results. This paper addresses the benefits and concerns derived from centralized purchasing from a microeconomic and legal perspective and proposes that centralization should be carried out in a pro-competitive manner with an emphasis on long term efficiency, benefiting all stakeholders, and not purely tender cost saving. To do so, central purchasing bodies and their purchasing power should be regulated by adopting conducts in line with competitive standards and public procurement "best-practices" guaranteeing that buyer power is not abused and the competitive playing field is preserved.

Keywords: EU public procurement law, central purchasing bodies, EU competition law

JEL Classification: K21, K23