About NOK 2 billion is spent annually on patient transport in Norway. Most of this is related to taxi journeys. The Regional Health Authorities (RHF) are responsible for the procurement of patient transport. The health authorities use competitive tendering procedures to procure public transport in order to stimulate competition and thus reduce their expenditure on patient transport. Lower expenditure on public transport will make more money available for the treatment of patients.
Both the licensing authorities (the county administrations) and the purchasers (RHF) are able to influence the degree of competition in tenders for patient transport. The county administrations may, for example, increase competition by allowing more taxi central dispatchers in an area and by increasing the number of taxi licences. The health authorities can influence the competitive situation through how they formulate the call for tender and by acting as vigilant purchasers who keep an eye out for signs of illegal collusive tendering. In March 2009 the Competition Authority sent a letter to the county administrations and the Regional Health Authorities informing them about various methods for increasing competition.
Where there is competition, illegal cooperation among competing taxi businesses can weaken or eliminate competition. The Competition Authority can then order the termination of such illegal behaviour and impose fines and other sanctions on the cooperating businesses.
In September 2006 Taxi Midt-Norge AS – a countywide dispatch service that organises taxi licence holders in the county of Nord-Trøndelag – submitted a tender on behalf of all the taxi dispatchers and taxi licence holders in a competitive tendering procedure advertised by the Central Norway Regional Health Authority for the purchase of patient transport for Nord-Trøndelag. The bid thus involved collusive tendering (bid-rigging) among all the taxi licence holders in Nord-Trøndelag.
The Central Norway Regional Health Authority submitted a complaint about this collusive tendering to the Competition Authority. After considering all the information relating to the case, the Competition Authority decided that the bid submitted by Taxi Midt-Norge AS in the competitive tendering procedure constituted illegal collusive tendering in breach of Section 10 of the Competition Act. Notification of a fine for breach of the law was issued in December 2008, and the final decision was made in March 2009. Taxi Midt-Norge was fined NOK 300,000 for violation of the Competition Act. The Central Norway Regional Health Authority conducted a round of tenders in 2008 with a view to entering into new contracts and having new suppliers from 1 January 2009. However, the round was cancelled because the bids submitted would have resulted in considerably higher costs than budgeted for patient transport in Nord-Trøndelag. The Central Norway Regional Health Authority therefore engaged in direct negotiations with several potential providers in the market.
This resulted in three providers receiving contracts for patient transport in various parts of Nord-Trøndelag during the period 1 January 2009 to 31 December 2011, with the option for a 1-year extension. According to the Nord-Trøndelag Health Trust the savings achieved by having competing bids for patient transport amount to approximately NOK 2 million per year. The health authority has stated that the Competition Authority's notification of its intervention against Taxi Midt-Norge played an important part in gaining acceptance for the outcome of their negotiations with the various providers.
One important point in the Competition Authority's assessment of the cooperation via Taxi-Midt Norge was the question of whether the various taxi businesses were actual or potential competitors in the tender. The call for tender stipulated no requirements that bidders be able themselves to offer services to one or more municipalities, and each of the central dispatchers and licence holders could in principle submit bids for just parts of the tender. The Competition Authority therefore based its decision on the licence holders associated with the main county service being largely actual or potential competitors.
In a similar case in the county of Nordland, the health authority made greater demands with respect to capacity. In much of the county, there were no grounds for submitting more than one bid in the competition. In these areas the health authority would not have received more than one offer, even without cooperation through the countywide taxi business. The Competition Authority therefore decided that there was no reason to intervene in the case in Nordland.
If little attention is paid to the effects on competition, then county administrations and the Regional Health Authorities must be prepared for transport services to be more expensive. If no arrangements are made for competition then the competition rules will not normally have a decisive impact either. If only one taxi company or one combination of such companies is able to submit a bid because of the terms of the call for tender, there will be no illegal collusive tendering to intervene against.
These examples from Nord-Trøndelag and Nordland illustrate well how important it is to create a good basis for competition through formulating the call for tenders, vigilantly carrying out competitive tendering procedures, and actively enforcing the Competition Act.