Public Procurement of Hearing Aids

Ilham Timimi & Abdulkadir Atsiz

Student thesis: Master thesis

Abstract

This thesis examines whether it is necessary to facilitate greater access to SME’s in public procurement when purchasing hearing devices and whether framework agreement creates social efficiency.
There is a strong trend emerging toward the aggregation of demand by public purchasers in general.
This thesis starts by analysing the relevant relationship between EU competition law and public procurement law. In order to clarify the ruling we used C-205/03 P FENIN and C-113/07 P Selex. Here The Court stated, that public procurement did not exercise an economic activity hence they are not an objective to the EU competition rules. The Directive also emphasis that member state must facilitate greater access to public procurement by SME’s which however is quite expensive. It was necessary to determine whether there is a market for SME’s to begin with. Here we can stress out that since the hearing aids market is an oligopoly concentrated market, and since the product is characterised as high differentiated complex technology, and moreover there is a tendency to buy off smaller sized companies it is argued that it does not emerge any particularly need to provide favourable conditions to SME’s. Additionally to whether framework agreement is the best contract form and creates most social efficiency, the thesis analysed that framework agreement do not provide the necessary flexibility in order to update the purchasing product with the technological developments during the framework agreement period. Furthermore there is low degree of monitoring in one hand and other hand there is no effective incentive contract managed to minimize behavioural failure and furthermore it is costly to replace a supplier in case of contract breach.
Although Amgros I/S should maintain the usage of framework agreement, because of the attractive prices they can achieve due to the purchasing volumes are larger, however this is a general assumption, which is presumed. To gain more efficient purchases Amgros should utilize parallel framework agreement. Amgros I/S do not have to be worried about excluding one of the suppliers since Amgros I/S has more than one supplier. Finally it is concluded that it’s not necessary to enabling greater access to the public procurement to SME’s in the hearing aids market. Conversely in a market with less degree of concentration and significantly lower entry barriers it would be necessary to induce favourable conditions.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2016
Number of pages121