New rules to facilitate the handling of abnormally low tenders

The Swedish Competition Authority has now submitted the report "Proposals to facilitate the handling of abnormally low tenders that are not seriously intended" ("Förslag för att underlätta hanteringen av onormalt låga anbud som inte är seriöst menade"), report 2025:4. The proposed changes are proposed to enter into force on 1 July 2026.

Legal basis

The proposals are designed on the basis that EU law governs and that amendments must not be contrary to treaties, directives and the case law of the European Court of Justice.

A concrete limit - 30 per cent rule

One of the key proposals relates to the introduction of an ancillary rule setting a concrete limit for when contracting organisations are obliged to request an explanation for an 'abnormally low price'. In the directive-driven provisions on abnormally low tenders in the LOU and LUF, it is proposed to introduce an auxiliary rule setting a limit for when the contracting organisation must always ask for an explanation of the price or cost of a tender.

"If the price or cost of a tender is more than 30 per cent lower than the average price or cost of all the tenders in the procurement, the contracting authority shall request the supplier to provide an explanation."

This means that contracting organisations would have a concrete guideline for when there is an obligation to act. The advantages of an auxiliary rule are that it creates transparency, predictability and equal treatment as the criteria for assessment are known in advance. It is important to note that the auxiliary rule is meant to be an alternative prerequisite for identifying abnormally low tenders, so the introduction of an auxiliary rule does not prevent tenders from being assessed as abnormally low also in cases other than those covered by the auxiliary rule.

Clarification of responsibilities

The so-called adversarial procedure is proposed to be clarified in the Directive-based provisions on abnormally low tenders in LOU and LUF as follows:

• Step 1 - Assessment by the contracting organisation: The contracting organisation is responsible for assessing whether a tender appears to be abnormally low.

• Step 2 - Specific request for explanation: When requesting an explanation, the contracting organisation has to specify the elements of the tender that it considers make the tender appear abnormally low.

• Step 3 - Supplier's explanation: It is up to the supplier to explain how the contract can be performed despite the low price or cost.

• Step 4 - Contracting organisation's assessment of the explanation: The contracting organisation must assess the explanations provided by the supplier.

• Step 5 - Opportunity to comment before rejection: Before the procuring organisation decides to reject a tender, the supplier shall be given an opportunity to comment, within a reasonable time, on the circumstances that, in the opinion of the procuring organisation, constitute grounds for rejection.

This clarification should make it easier for contracting organisations to know what is required of them, and what is required of the supplier in the investigation process. It clarifies that the responsibility for demonstrating that a low tender is realistic and seriously intended lies with the supplier, whilst the contracting organisation is responsible for identifying and specifying what is problematic in the tender.

Satisfactory explanation requirement

In the directive-driven provisions on abnormally low tenders in LOU and LUF, it is proposed to clarify that contracting organisations must reject tenders if the supplier has not provided a satisfactory explanation. In assessing whether the explanation is satisfactory, particular account shall be taken of whether the supplier has demonstrated the credibility and seriousness of the tender.

A satisfactory explanation must relate to the conditions of the specific contract and be relevant to the deviation to be explained. According to the Swedish Competition Authority, the requirement for what constitutes a satisfactory explanation should also be set in relation to the deviation to be explained. For example, higher demands should be placed on the explanation when the tender's price or cost is so low that it does not appear to cover the supplier's own costs for performing the contract, compared to when a tender means that the supplier expects a slightly lower profit margin.

"The contracting authority shall assess the explanations provided by the supplier. In assessing whether an explanation is satisfactory, particular account shall be taken of whether the supplier has demonstrated the credibility and seriousness of the tender."

The provisions on abnormally low tenders are an outgrowth of the basic principles and ultimately aim to create a level playing field. If contracting organisations enter into contracts with suppliers that do not have the ability or intention to perform the contract according to the terms and conditions, competition and equal treatment risk being undermined. This means that a satisfactory explanation of a suspected abnormally low tender must not only show that a supplier wants a contract, but the explanation must satisfactorily demonstrate that the supplier can fulfil the contract in accordance with its tender. According to the Swedish Competition Authority, it is thus required that the supplier credibly explains how the contract can be fulfilled despite the abnormally low price or cost.

"The contracting authority must reject the tender if the supplier has not provided a satisfactory explanation of how the contract can be performed despite the low price or cost."

A clarification of this in the legal text would, in the opinion of the Swedish Competition Authority, make it clear that a satisfactory explanation needs to show that the supplier can actually perform in accordance with the tender and reduce the risk of overly generalised explanations being accepted.

Extended mandatory obligation to reject

A mandatory obligation to reject abnormally low tenders is proposed to be introduced for procurements under Chap. 19. LOU, Chapter 19. LUF and Chapter 15. LUFS, as well as procurements above the thresholds under LUFS. This means that contracting organisations would no longer have any discretion when a tender is assessed as abnormally low without satisfactory explanation - the tender would have to be rejected.

Restriction on new explanations in the event of review

The Swedish Competition Authority proposes that a regulation be introduced whereby only the explanation of an abnormally low tender submitted by the supplier within the adversarial procedure is taken into account in a review, unless there are special reasons.

According to the Swedish Competition Authority, the preferred approach would be that the court's assessment, as a general rule, relates to the question of whether the contracting organisation has handled the contradictory procedure within the framework of the relevant provisions. If the contradictory procedure has been followed, the court should, in the opinion of the Swedish Competition Authority, be prevented from taking into account new explanations received from the supplier during the review process. According to the Swedish Competition Authority, any other arrangement would mean that the adversarial procedure would lose its significance and intended function.

Further measures

The Swedish Competition Authority also proposes that the Public Procurement Authority be given a special assignment to develop appropriate support for contracting organisations regarding the practical application of the provisions on abnormally low tenders. Furthermore, it is proposed that the possibility of increasing the governance of contracting organisations' contract monitoring in a statute, with the aim of strengthening contract monitoring, be further investigated.

Concluding comment

The proposed amendments aim to make it easier for contracting organisations to reject abnormally low tenders that are not seriously intended. However, it remains to be seen to what extent the proposed amendments, if realised, will change the practical difficulties of rejecting declarations on a substantive level.

One view expressed during the Swedish Competition Authority's investigation is that it is "too easy" for suppliers to explain suspected abnormally low tenders and that a low requirement for the supplier's explanation has been stated to be one of the biggest obstacles to the rules on abnormally low tenders being able to fulfil their function of preventing rogue suppliers. The Swedish Competition Authority's review of decisions from the administrative courts and the administrative courts of appeal also indicates that suppliers are often allowed to explain tenders that appear abnormally low with relatively general and standardised reasons.

The CJEU has clarified that a supplier should be able to provide, without any limitation, any explanation that it considers appropriate in the light of the nature and characteristics of the procurement, and that the contracting organisation is obliged to take into account any explanation provided by a supplier before deciding to accept or reject the tender. Whilst the clarification that the explanation should demonstrate that the tender is "credible and seriously intended" provides some guidance, the fact remains that the assessment must be made on a case-by-case basis and that suppliers have a wide margin to explain their tenders. The support that the Public Procurement Authority is proposed to develop regarding the practical application of the provisions on abnormally low tenders may possibly provide guidance in the assessment, but it remains to be seen how such support will be designed.

The restriction of the possibility to submit new explanations in the event of a review would be a positive change that strengthens the independent importance of the adversarial procedure. It would create incentives for suppliers to provide full explanations already during the procurement and would likely reduce the risk of contracting organisations having to deal with new arguments during the review process in court.

However, the question remains whether, in practice, contracting organisations will face the same difficulties in the substantive review of suppliers' declarations. There is a risk that they will continue to be forced to accept relatively standardised explanations, especially when these are relevant to the contract in question. What is required for the supplier to have demonstrated the credibility and seriousness of the tender, and for the explanation to adequately demonstrate how the contract can be fulfilled despite the low price or cost, is ultimately a question that will evolve through case law.