Competition Principle in Procurement Law

The competition principle obliges public contracting authorities to ensure genuine bidder competition and to avoid restrictive conditions.

Definition: The competition principle is a fundamental principle of public procurement law that obliges contracting authorities to design procurement procedures so that genuine and open competition between the largest possible number of companies is guaranteed, and that prohibits competition-restricting requirements, discrimination and artificial market access barriers.

Last updated: January 2026 · Legal status: Art. 18 Directive 2014/24/EU; AT: § 20 BVergG 2018; DE: § 97 (1) GWB

What is the competition principle?

Alongside the transparency obligation and the equal treatment principle, the competition principle is one of the three load-bearing pillars of European procurement law and enshrines the goal that procurement by public contracting authorities is always carried out under conditions of genuine competition. On the basis of this competition, the public sector should identify the most economically advantageous offer and thereby deploy public funds efficiently.

The competition principle is directed against both state and private restrictions of competition: contracting authorities may not set conditions that favour or exclude particular companies without objective justification. At the same time, contracting authorities must actively counter agreements between bidders (bid rigging, antitrust in public procurement).

Significance and function

The competition principle serves a dual purpose: it secures the economic advantage of the contracting authority through price and quality competition and protects bidders from arbitrary or discriminatory exclusion from the market for public contracts.

No competition-restricting conditions

Art. 18 (1) of Directive 2014/24/EU expressly prohibits designing procurements so that competition is artificially restricted. In particular, the following are prohibited:

Excessive requirements: Suitability requirements that go beyond what is objectively necessary and effectively exclude SMEs (e.g. disproportionately high minimum annual turnover)
Technical specifications: Requirements tailored to a specific product or supplier (brand naming without "or equivalent")
Geographical discrimination: Requirements that effectively disadvantage companies from other EU Member States
Lot-free overall awards: Unnecessary aggregate awards of large contracts that exclude SMEs from participation

Division into lots to promote SMEs

A concrete expression of the competition principle is the obligation to divide into lots (Art. 46 Directive 2014/24/EU): contracting authorities should in principle divide contracts into lots in order to enable smaller and medium-sized enterprises to participate. If they refrain from dividing into lots, they must justify this in the procurement file.

Austria: § 98 BVergG 2018 (division into lots)
Germany: § 97 (4) GWB in conjunction with § 30 VgV (obligation to divide into lots)

Prohibition of discrimination

The competition principle is closely linked to the equal treatment obligation: all bidders must be able to participate in the competition under equal conditions. Discrimination based on nationality, company size or other extraneous characteristics is impermissible.

Antitrust in public procurement

The competition principle also extends to antitrust law in public procurement: bidder agreements (bid rigging), in which companies coordinate their offers and eliminate price competition, are prohibited under antitrust law (§ 1 GWB; Art. 101 TFEU) and can result in the nullity of bids as well as substantial fines. Contracting authorities have a duty to recognise and report signs of bid rigging.

Market access and prior communication

The competition principle also prohibits impermissible prior communication between the contracting authority and individual bidders (so-called "consultant abuse"): if a company that was involved in the preparation of a procurement procedure later acts as a bidder, the contracting authority must ensure through appropriate measures that competition is not thereby distorted (Art. 41 Directive 2014/24/EU; § 7 VgV).

Legal basis

The competition principle is anchored at EU and national level and supplemented by antitrust law.

EU: Art. 18 (1) Directive 2014/24/EU; Art. 46 (division into lots); Art. 41 (prior communication); Art. 101 TFEU (cartel prohibition)
Austria: § 20 (1) BVergG 2018; § 98 (division into lots); § 101 (competition principle)
Germany: § 97 (1) and (4) GWB (competition and division into lots); §§ 1 et seq. GWB (antitrust law)

Related terms

FAQ

Must contracting authorities always divide contracts into lots? No, there is a general obligation to divide into lots, but it is not absolute. Contracting authorities may refrain from dividing into lots on objective grounds, but must justify this in the procurement file. Permissible reasons include, for example, technical or organisational necessities where integrated performance is essential.

What is bid rigging? Bid rigging occurs when companies participating in a call for tenders agree in advance which company will submit the lowest bid, while the other bidders either do not bid or submit deliberately inflated prices. Bid rigging is a criminal offence (§ 168b StGB AT; § 298 StGB DE) and prohibited under antitrust law.

May a contracting authority draft the specifications in such a way that only one bidder can fulfil them? No. A call for tenders tailored to a specific bidder violates the competition principle and the equal treatment principle. Such awards can be annulled in review proceedings. Exceptionally, reference may be made to a specific product if this is objectively unavoidable and accompanied by the addition "or equivalent".

Last updated: January 2026 All information without guarantee. For legally binding advice, please contact a law firm specialising in procurement law.