Austria: corruptive behaviour in public procurement procedures as a deal breaker for mergers and acquisitions transactions?

In light of the economic significance of public procurement and the respective volume of public expenditure in Europe (public sector spending accounts for approximately 20 per cent of EU GDP), it is a well-established and unsurprising fact that public procurement proceedings are particularly vulnerable to corruption. Transparency International has identified public procurement as one of the key problems across the EU.

Companies that are involved in corruptive behaviours in the context of or in relation to a public procurement procedure must expect painful sanctions under the public procurement law and heavy criminal penalties. However, due to the long-lasting consequences of the respective sanctions and penalties, any possible involvement in corruptive behaviours in procurement procedures is also very likely to have a substantial impact on the results of potential mergers and acquisitions (M&A) or sales activities involving the respective legal entity.

Corruption in public procurement proceedings can be treated as criminal matters if they involve (i) as an agreement restricting competition in a procurement procedure (section 168b of the Austrian Criminal Code, or ACC), (ii) fraud (section 146 et sequ of the ACC) or (iii) bribery…

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