Procurement Act 2023

Exclusion and debarment from public procurement on competition grounds

The UK public procurement regime has been revamped by The Procurement Act 2023 (PA2023) that came into force on 24 February 2025.

It seeks to consolidate regulations, enhance transparency, and promote value for money. It aims to support small businesses, ensure ethical practices, and create a central digital platform for easier supplier participation.

The PA2023 also enhances the rules on excluding suppliers from future public procurement due to serious misconduct, unacceptably poor performance, or other circumstances which make the supplier unfit to bid for public contracts. This enables public authorities to reject bids from suppliers that pose risks.

In this article, we discuss the circumstances in which suppliers may face exclusion and debarment on competition grounds and reiterate the importance of competition law compliance.

What is the driving force behind competition law?

Competition law comprises a framework of rules designed to promote fair competition and prevent anti-competitive practices. The main purpose is to maintain a level playing field where businesses can compete fairly, ultimately benefiting consumers through lower prices, improved efficiency, higher quality products, and increased innovation and choice.

What competition laws should you beware of?

Competition law has many facets. The most relevant of which, for the purposes of exclusion and debarment under the PA2023, include the following:

The abuse of a dominant market position: This is often associated with monopolistic behaviour. It concerns companies that possess substantial power in a given market, enabling them to behave independently without regard for competitors and customers. While holding a dominant position is not inherently problematic, the abuse of that position is prohibited. Abusive behaviour can be wide-ranging and may include actions that drive a competitor out of the market, or prevent new ones from entering.
Anti-competitive agreements: Agreements are unlawful if they have the object or effect of restricting competition. This includes cartels – a group of competitors that collude to manipulate a market – such as agreements to fix prices, restrict output, and share markets. This prohibition also covers agreements between firms at different levels of the market – for example, a supplier of goods may instruct retailers not to resell products less than a certain price.

Note, recent developments in UK competition law have seen increased efforts by the CMA to detect and penalise cartel activities. This includes the use of advanced data analytics to identify suspicious bidding patterns and the offering of leniency (immunity) for whistleblowers who report cartel activities. The consequences of cartel behaviour are severe for both the offending company and individuals involved. The CMA’s heightened efforts to detect cartel activities only increase that risk.

While aspects of competition law compliance, such as merger regulations and the subsidy control rules, are important, they are less relevant – though not entirely irrelevant – to the exclusion and debarment rules under the PA2023. Therefore, we have not explored these areas in detail in this article.

What are the consequences of competition law infringement?

It is crucial that businesses and individuals comply with competition law to avoid a range of severe consequences, including civil and criminal liability.

For individuals:

A director involved in either what is known as ‘hardcore cartel agreements’ or an abuse of dominant position infringement may face disqualification to act as a director for up to 15 years.
Also, if an individual enters into a hardcore cartel agreement, they may face criminal liability leading to a maximum of a five-year custodial sentence and/or an unlimited fine.

For companies:

For a finding of an anti-competitive agreement or abuse of dominant position, the CMA may impose a fine of up to 10% of the company’s worldwide turnover, order the parties to cease or modify the relevant agreement or cease the anti-competitive behaviour, and/or impose behavioural or structural undertakings. The CMA may apply to the courts to enforce these measures and could lead to them ordering injunctions.
Firms may also face private actions for damages by third parties arising from competition infringements. Whilst the regime is new such that an award of damages by the courts is yet to be made, the claimed damages are often significant.
There are wider consequential issues associated with a competition infringement. For instance, investigations by the CMA (or other regulator) are public and could cause reputational damage, they also require a lot of resources (both financial and senior management time).

In addition to the liabilities listed above, cartelists have to worry about another type of liability that will have a long-term impact. Namely, the exclusion and debarment from future public procurement.

What are the new rules of exclusion and debarment for public sector procurement?

Under the previous regime, Regulation 57 of the Public Contracts Regulations 2015 (PCR) established the basis for excluding suppliers from future procurements. The PA2023 has strengthened these exclusion rules and introduced a new debarment register. This register, managed and published centrally by the government, lists suppliers that are excluded or excludable from procurement processes.

The rules are intended to ensure:

the reliable delivery of public contracts;
effective competition for public contracts;
public confidence in the delivery of public contracts;
the protection of public funds; and
the protection of the public, the environment, national security interests and the rights of employees.

As with PCR, there are two types of exclusion ground under the PA2023: mandatory and discretionary. The PA2023 has extended the list of mandatory grounds as it now includes suppliers involved in cartel activity. Beware, suppliers may be excluded from public procurement contracts under certain exclusion grounds by virtue of being a ‘connected’ or ‘associated’ person, which includes directors, parent or subsidiary companies, and key sub-contractors.

To note, for associated persons and sub-contractors, the supplier must be given a reasonable opportunity to replace them before being excluded. This is not the case for connected persons as it is deemed that they cannot be replaced for the particular procurement in the same way as entities in these other categories can, and as such there is no requirement to give a supplier a reasonable opportunity to replace a connected person before exclusion.

What is 'Exclusion'?

The PA2023 prevents a supplier from participating in tenders or being awarded public contracts based on assessed exclusion grounds. These grounds can be either mandatory or discretionary. While in this article we focus on competition-related grounds, it is important to note that there are other non-competition grounds, such as criminal offences and other types of misconduct.

Mandatory Exclusion (Schedule 6 of PA2023)

The mandatory exclusion may apply where:

the CMA (or another regulator) finds that a supplier has participated in cartel activity or has been convicted of a criminal cartel offence under the Enterprise Act 2002; and
the circumstances are such that the exclusion ground is continuing or likely to reoccur.

If a supplier falls within the mandatory exclusion or is on the debarment register for a mandatory exclusion, contracting authorities must exclude it from a procurement (i.e. they are an “excluded supplier”).

Discretionary Exclusion (Schedule 7 of PA2023)

The discretionary exclusion may apply where:

a contracting authority or the Minister of the Crown considers that a supplier has engaged in cartel activity or other non-cartel competition infringements under the Competition Act 1998, including anti-competitive agreements or abuse of dominant position; and
the circumstances are such that the exclusion ground is continuing or likely to reoccur.

If a supplier falls within the discretionary exclusion or is on the debarment register for a discretionary exclusion, contracting authorities may exclude it from a procurement (i.e. they are an “excludable supplier”).

What is 'Debarment'?

The PA2023 sets out how a company may be placed on a central debarment register. The consequence of being placed on the register is the supplier is prevented from being able to participate in any covered procurements (such as those over a designated threshold for the type of contract and not exempted) or even a ban from being awarded public contracts for up to five years.

Being considered for debarment will not be considered independently. A supplier will only be considered for debarment following an assessment of exclusion grounds.

The central debarment list will be managed by the newly established Procurement Review Unit (part of the Cabinet Office) and published on GOV.UK.

What steps can I take to mitigate the risk of exclusion and debarment?

A potential five-year ban on being awarded public contracts is significant for businesses that rely on such contracts. This could be devastating for some companies, especially when combined with the other financial and commercial consequences associated with competition law infringements, as discussed above. Therefore, compliance with competition law is ever more crucial.

So what steps can be taken to avoid these risks? The short answer is to remain compliant with competition law. Specifically, avoid any involvement in a cartel. Understanding and adhering to competition law is the most effective way to ensure your company’s ability to participate in public procurements. The CMA offers useful materials and guidance on all types of competition compliance. The “Cheating or Competing” campaign page provides valuable insights into cartelistic behaviour. Additionally, the CMA has provided guidance on the new exclusion and debarment rules under the PA2023 [link].

If you suspect an infringement has occurred, it is not necessarily fatal. There are still ways to protect the company from exclusion and debarment, as well as individual liability. But acting swiftly is essential.

Self-cleaning and leniency are two policies that can be utilised. Through an admission of wrongdoing and demonstrating future compliance with competition law to the CMA, companies and individuals may be rewarded with immunity from liability or avoid being added to the debarment list and excluded from public procurements.

What is Leniency?

The leniency programme allows businesses and individuals involved in cartel activities to report their involvement to the CMA in exchange for reduced penalties or complete immunity. By cooperating with the CMA's investigation, they can avoid significant fines and, in some cases, criminal prosecution.

The process requires the wrong-doer to admit the wrong-doing, providing the CMA with all the relevant information about the cartel, and fully cooperate with the CMA’s investigation. Additionally, the applicant must not have coerced others to join the cartel.

Those first to report under the CMA’s leniency programme can avoid exclusion and debarment, as well as certain liabilities for an infringement of competition law. Applying under the leniency programme with haste is imperative; the level of immunity cascades depending on how quick you apply. Generally, those first through the door receive blanket immunity from all civil and criminal penalties, including exclusion or debarment. Subsequent applicants may receive a reduction up to 50% on any applicable fines, and individuals may receive immunity, but this is discretionary. Even later applications may not benefit from leniency at all.

The CMA has published a quick-guide on what leniency is and how it works.

What is Self-Cleaning?

If a supplier does not benefit from immunity through the leniency programme, it can avoid exclusion or debarment on competition law grounds by demonstrating ‘self-cleaning’.

Self-cleaning involves showing the CMA that the circumstances leading to the exclusion ground, such as cartel behaviour, are no longer continuing and are unlikely to reoccur – for example, by providing evidence that the cartel no longer exists.

The contracting authority or Minister of the Crown may assess whether a supplier has successfully self-cleaned by considering various factors including:

Evidence that the supplier, associated person, or connected person has taken the circumstances seriously, for example by paying compensation. The grant of leniency and/or entering into a settlement agreement with the CMA may be relevant evidence.
Steps taken by the supplier, associated person, or connected person to prevent the circumstances occurring again, such as changing staff or management, or implementing procedures and training.
Commitments to take such steps, or to provide information or access to allow verification or monitoring of such steps.
The time that has elapsed since the circumstances last occurred.
Any other evidence, explanation, or factor that the authority considers appropriate.

A friendly reminder

This article serves as a reminder of the wide-ranging and significant consequences of non-compliance with competition law. It should encourage companies to review the measures in place to prevent any form of infringement of competition law. For companies involved in public procurement tenders, the consequences of an infringement have increased dramatically following the strengthening of the exclusion and debarment rules.

If you are concerned of the existence of a potential cartel or other competition law infringement, please do not delay in contacting a member of the Competition team at TLT. They can assist with making a leniency application on your behalf and help demonstrate that your company has ‘self-cleaned’. Additionally, if you would like to discuss the potential applicability of an exclusion ground, self-cleaning measures, or exclusion/debarment more generally, please do get in touch with our Public Procurement team.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2025. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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