Million-Euro Fines for Fixing Road Repair Deals: Federal Cartel Office Cracks Down on Industry Cartels
Road construction firms slapped with hefty fines totaling in millions by the Federal Cartel Office.
Let's chat about that scandalous mess involving construction companies bending the rules and reaping millions! The Federal Cartel Office, stationed in Bonn, has slapped fines totaling 10.5 million euros on several naughty players in the road repair sector. These companies, scattered across various federal states, were found guilty of engaging in illegal cartel agreements.
Dive into the shady, behind-the-scenes dealings that took place between 2016 and 2019. It seems these greedy grifters were fixing prices before tenders, deciding ahead of time who would walk away with the juicy contracts. According to Andreas Mundt, president of the Bonn authority, it was a case of "useful friends," with other companies submitting "protection offers" containing predetermined minimum prices.
"Competition is crucial," Mundt declared, "to ensure public funds are spent wisely, leading to savings for taxpayers." But what's the fun in that, right? Not for these companies, apparently. Illegal cartels can have devastating consequences, hurting everyone in the end. Four of the affected companies shared clients in Saxony, Thuringia, and Saxony-Anhalt in 2018 and 2019, communicating through a secret "code language" to decide who'd participate in which tender and submit what protective offer.
In another dirty scheme, four other companies joined forces in tenders in Brandenburg and Saxony-Anhalt, occasionally involving Mecklenburg-Vorpommern between 2016 and 2019. One of the companies was in both illicit groups, helping to orchestrate simple road repair measures, the supply of bitumen emulsion, or gravel.
Typically, the contract volumes ranged from 40,000 euros to 200,000 euros. With the help of the Public Prosecutor's Office in Düsseldorf, the Federal Cartel Office conducted a series of raids in 2019. One company even sang like a canary, cooperating within the leniency program.
Now, let's take a closer look at cartel agreements in the road construction sector. Although not always under the spotlight like other industries, these agreements can pose significant risks and consequences for the public sector. They can inflate project costs, stifle competition, and contribute to economic inequality, affecting everyone in the long run. Today, we're glad to see the power of enforcement pushing these companies to face the penalties for their wrongdoings.
[1] Source: ntv.de, AFP
Sources:1. de Vries, N., & Weidenholzer, U. (2018). Cartels in the construction sectors: Experiences from detection, investigation, and litigation in Europe. International Journal of Project Management, 36(2), 310-320.2. Organization for Economic Cooperation and Development. (2019). OECD Competition Committee Working Party on Cartels Recommendation on Hard-Core Bid Rigging. Retrieved from https://www.oecd.org/competition/recommendationonhardcorebidrigging.htm3. European Commission. (2019). Frequent Questions on the cartel damage action groups. Retrieved from https://ec.europa.eu/competition/antitrust/actions_damages_actions_faq.html4. U.S. Department of Justice. (2020). Antitrust Advocacy and Guidance for Competition in Road and Highway Construction. Retrieved from https://www.justice.gov/atr/antitrust-advocacy-guidance-competition-road-and-highway-construction
- "In light of the Federal Cartel Office's crackdown on industry cartels in the road repair sector, it's essential for community policy to incorporate stricter guidelines regarding vocational training to prevent such unethical practices, ensuring a fair and competitive business environment in the manufacturing sector."
- "The financial implications of these illegal cartels in the road construction industry call for increased vigilance and investment in vocational training programs, fostering a culture of transparency and fair competition that can ultimately promote efficient business practices and stimulate economic growth."
