Risks of Corruption and Collusion in the Awarding of Concession Contracts

15-06-2012

This briefing note describes the risk of undue influence, corruption and collusion on sector-governance decisions and the award of concession contracts. State intervention to reduce market failure easily creates a risk of governance failure, and this concern must be addressed to secure the intended combination of market forces and sector regulation – as is so well offered by concession contracts. Harmonised EU legislation specifically on the award of concession contracts is an important step to reduce the mentioned risks, particularly because it will make undue influence on these markets more visible across Member States and develop a common understanding of how to best secure ‘value for money’ for consumers. However, the impact of the new rules on the award of concession contracts will depend not only on how carefully they are implemented, but also the quality of a broader set of integrity mechanisms within the respective Member States. Hence, while the law is an important step towards securing efficient regulation, we need checks and balances on the many decisions that are still up for discretionary judgment by politicians and civil servants with sector oversight responsibility.

This briefing note describes the risk of undue influence, corruption and collusion on sector-governance decisions and the award of concession contracts. State intervention to reduce market failure easily creates a risk of governance failure, and this concern must be addressed to secure the intended combination of market forces and sector regulation – as is so well offered by concession contracts. Harmonised EU legislation specifically on the award of concession contracts is an important step to reduce the mentioned risks, particularly because it will make undue influence on these markets more visible across Member States and develop a common understanding of how to best secure ‘value for money’ for consumers. However, the impact of the new rules on the award of concession contracts will depend not only on how carefully they are implemented, but also the quality of a broader set of integrity mechanisms within the respective Member States. Hence, while the law is an important step towards securing efficient regulation, we need checks and balances on the many decisions that are still up for discretionary judgment by politicians and civil servants with sector oversight responsibility.