Gothenburg municipality should have awarded contracts for services from Göteborg & Co

The Swedish Competition Authority is critical of the municipality of Gothenburg because, for a number of years, it has paid several hundred million kronor to Göteborg & Co Träffpunkt AB. At the same time, however, the decision of the Swedish Competition Authority also acknowledges that there has been a positive development in the company, with a change of ownership conditions and a reduction of the external sales with which Göteborg & Co has been involved.

Amongst other things, Göteborg & Co works to market and strengthen Gothenburg’s position as a destination for tourism, meetings and events. For many years, a large part of its operations has been financed with funding from the municipality’s budget. In 2016, the municipality paid SEK 113 million to Göteborg & Co. It is the ruling of the Swedish Competition Authority that the allocation of budget funds, together with the municipality’s control of Göteborg & Co, constitutes a contract situation that necessitates a procurement process and not a general contribution.

When a municipal company is either partially privately owned or has a turnover that is too high, it is not permissible to directly award contracts without exposing them to market forces with consideration to the so-called Teckal exemption. This constitutes a breach of the procurement legislation’s provisions concerning internal contracts. In this case, the procurement should have been advertised to provide additional suppliers with the opportunity to submit tenders.

“The procurement legislation prohibits contracting authorities from concluding agreements on cooperation with wholly or partly-owned companies that do not meet the so-called Teckal criteria”, says the Swedish Competition Authority’s Deputy Director General Kristina Geiger.

Read the decision, dnr 610/2014 (in Swedish)