Landspítali takes action to improve procurement practices

The Competition Authority has published its decision. No. 29/2016, The Landspítali's procurement of medical products – the importance of competition in public procurement. The decision describes the Competition Authority's investigation into Landspítali's procurement of medical devices and other healthcare products, and indications of the hospital's competition-restrictive conduct in connection with them. The investigation was prompted by a complaint from Logaland ehf, a healthcare service company that sells medical products, including medical devices, nursing supplies and nursing equipment.

The decision, which is now being published, outlines significant changes to the Landspítali's procurement procedures. They are designed to permanently strengthen competition in the market for healthcare products in Iceland, for the benefit of the public, Landspítali and competitors in the market. The measures remove the barriers to competition that the Competition Authority identified during its handling of the case. An annex to the decision publishes Landspítalans' formal declaration of these measures.

The above measures were developed in discussions between the Competition Authority and Landspítalinn. The Competition Authority, among other things, made observations on the procurement of goods that are exempt from the obligation to tender, procurement using charitable funds, the use of subjective tendering criteria, the implementation of framework agreements and the hospital's communications with suppliers. The Competition Authority also proposed specific solutions that could be implemented to improve procurement and thereby competition in the relevant markets.

During its investigation of the case, the Competition Authority took a position on whether there were grounds to impose binding intervention on Landspítalinn. The authority's conclusion is that, in light of the circumstances of the case, there are no grounds for applying either the prohibition provisions of the Competition Act or the provisions of the Competition Act that permit action in respect of conduct by public bodies which has an adverse effect on competition. This conclusion is based, among other things, on considerations regarding the scope of the Competition Act, the overlap in the roles of the supervisory authority and the Procurement Appeals Board, and the measures that Landspítali has taken.

The actions of the National University Hospital to promote competition in the trade of healthcare products are as follows:

1. Competition law programme
2. • Landspítali will ensure that all managers and staff with purchasing authority are fully informed of the requirements that competition law places on its procurement of healthcare products.

1. Relationships with suppliers, handling of confidential information and fairness 
2. • Landspítali will, by taking the necessary measures, ensure that sensitive business information is not passed between competitors through the hospital's fault.

1.  Procedures for procurement falling below the thresholds for the rules on public procurement
2. • Landspítali will regularly use requests for quotations for such procurement. It will be sought to send requests for quotations to all known suppliers offering the relevant product and/or to have them published in an open portal on the hospital's website.

1. Purchases for gift money
2. • When procuring healthcare products, equipment and supplies with donated funds, every effort shall be made to follow the same procedures as for other procurements, with the aim of obtaining the most favourable price and the best quality, i.e. to achieve the most cost-effective procurement. Price enquiries shall therefore generally be used for the procurement of such goods.
3. Rules on subjective tender conditions and trademark guarantees
4. • Since the Competition Authority's investigation began, Landspítali has made the descriptions in its tender documents much more precise and detailed regarding the implementation of the assessment of subjective tender criteria in connection with the hospital's procurement. Landspítali intends to continue its work on improving the presentation and implementation of subjective tender conditions, including by publishing ready-made examples on the procurement department's website.
5. Quality Manual
6. • Landspítali will implement new procurement regulations, including on the above-mentioned matters, and will compile them into a dedicated Quality Procurement Handbook for Landspítali.
7. Timeline, monitoring and review
8. • The measures outlined in the statement are expected to be implemented within 9-12 months. Landspítali will establish a steering group, which will include a representative from the National Audit Office, to oversee the changes. After two years, the working group will assess the implementation of the measures and their impact on the hospital's procurement. The working group shall report the findings of this work to the Competition Authority.

The declaration is further elaborated in the decision of the Competition Authority.

Páll Gunnar Pálsson, Director-General of the Competition Authority:
„The National University Hospital is one of the largest public sector purchasers of goods and services. In the view of the Competition Authority, it is extremely important that competition is considered when conducting public tenders. Well-designed tenders that ensure effective competition can achieve considerable savings and efficiencies in public sector operations. In connection with this matter, Landspítali has undertaken reforms to its procurement practices with this in mind.“