THE techniques deployed by European countries to lock out competitors are alarming and ingenious, according to the review by Alan Wood, the industrialist.

They range from demanding that bids for contracts are presented in regional dialect to forcing foreign companies to comply with “arcane” local laws in a bid to deter them at the first hurdle.

One third of businesses questioned for the study felt they had lost out because procurement laws had been breached.

Countries named and shamed for alleged unfair procurement practices include Greece, France, and Spain.

But Mr Wood, who relied on face-to-face interviews with companies of all sizes as well as trade groups and anecdotal evidence to produce his report at the Chancellor’s request, concedes that securing evidence of breach of the European procurement rules could prove difficult.

The problem, he says, is that many European member states exploit loopholes which enable them to comply with the letter of the law while failing to adhere to the spirit of it.

Some British companies have become so exasperated with the barriers they face that, the study says, they have resorted to buying up local companies in the country where work is on offer to boost their chances of winning it.

Governments frequently resort, the study says, to a technique known as “price squeezing”. Under this Governments ply local contenders for contracts with subsidies to ensure that companies from other countries will find it impossible to compete on price. This, the report says, creates an “uneven playing field” for businesses competing for the work.

It is particularly hard for British firms, it says, because, by measure of GDP, the UK grants the lowest amount of state aid across the European Union.

Another favoured technique exposed in the study is that of “false tendering” in which authorities invite international bids — which are expected to be lower — simply to drive down the price of the favoured local bidder, not because they want seriously to consider another company’s pitch.

Authorities may also break down big contracts into several smaller ones to avoid triggering the value threshold at which bids must be opened up to international competition.

More blatant techniques include ignoring the requirement to publish details of contracts and favouring companies because of their political allegiances. Businesses questioned in the study reported instances where they had allegedly been openly informed that the bid was won on the basis of a “political decision” — not on merit.

Even where countries are apparently following procurement rules, the report alleges, British companies still lose out. It is an open secret, the study says, that if a company finds out about a contract for the first time when it appears in the Official Journal of the European Union — the website where all European Union contracts are published — it is too late to compete.

Legitimate local rules such as Germany’s requirement for products to carry a so-called Technical Surveillance Association certificate — a safety approval from a German authority — also come under fire for making it “difficult and expensive” for foreign firms to tender for work.

Unfair techniques are not the only factor which prevents British companies accessing contracts though, the study says. It also criticises the so-called “baby buyer” syndrome, in which young, inexperienced and incompetent individuals are made responsible for handing out contracts worth hundreds of thousands of euros.

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