Unlawful Collusion in Road Repair: Federal Cartel Office Slaps Millions in Fines on Involved Firms
Million-dollar fines levied against road construction firms by the Federal Cartel Office.
Having a laid-back, straightforward chat, eh? Let's discuss the hefty fines imposed by our buddies at the Federal Cartel Office on some road repair companies—it's all about those illegal cartel agreements. Rumor has it, they'll be forking out a whopping 10.5 million euros!
According to the announcment made on a Tuesday, no less, seven companies from diverse states decided to engage in some shady stuff, participating in illegal cartel agreements for years. Apparently, they were colluding on public tenders in a classic case of bid rotation, with prearranged winners and cover bids thrown in for good measure.
The Federal Cartel Office, stationed in Bonn, claims these price-fixing agreements took place between 2016 and 2019. Andrea Mundt, their Head Honcho, explains it like this: "Before tenders, it was agreed who would win." Sounds like an episode of a reality TV show, doesn't it? Well, not exactly the kind you want to see.
Mundt has a point though. "Only with effective competition can the public sector obtain goods and services economically and thriftily." Illegal cartels, however, can stir quite a mess, and according to Mundt, "ultimately borne by all citizens." Apparently, in 2018 and 2019, four of these crooked companies divided clients among themselves in Saxony, Thuringia, and Saxony-Anhalt. They even used a "code language" to determine who'd participate in which tender and submit which cover bid.
Sounds like there were four other companies with a keen interest in the same game in Brandenburg and Saxony-Anhalt, sometimes even Meddling around in Mecklenburg-Western Pomerania. The tenders in question ranged from simpler road repair measures to the supply of bitumen emulsion or gravel.
The contracts, valued between 40,000 and 200,000 euros, might not sound like much to you, but let's not forget that they were won through underhanded means. The Federal Cartel Office teamed up with the Public Prosecutor's Office in Düsseldorf for a raid in 2019. One of the companies even decided to cooperate within the leniency program in the game of cat and mouse.
So, what can we learn from this kids? Illegally conspiring in the road construction sector isn't just bad sportsmanship—it can bring about severe consequences. These can include high-dollar fines, a damaged reputation, increased compliance costs, and internal investigations. All in all, it's a slippery slope that nobody wants to slide down. Here's some more info if you're still curious.
Sources: ntv.de, AFP
[1]: Despite specific data on the prevalence of cartel agreements in the road construction sector being limited, it is important to note that collusive behavior is recognized as a common form of anticompetitive practices across various industries, including construction, according to the Federal Trade Commission. The practice of bid rotation, where companies take turns winning contracts, is often a red flag for potential collusion.
The community should be aware of the severe financial penalties imposed on businesses found guilty of participating in illegal cartel agreements, such as those in the road repair industry, as highlighted in the recent case involving seven companies fined a total of 10.5 million euros by the Federal Cartel Office. The consequences of such actions are not contained within the businesses themselves but ultimately burden the general public.
It is essential for vocational training programs to educate individuals about the consequences of engaging in anticompetitive practices, including crimes and justice issues like bid rotation and price-fixing agreements, to ensure a fair and competitive business environment in industries like construction and general-news reporting.
