"Schutzgebote" and "Codespeak": Deceiving Public Authorities - Hefty Fines for Road Builders
Constructors Compromise Public Trust: Imposed Seven-Figure Penalty
In a sneaky manner, several road construction companies have been engaging in illicit price agreements for years, according to the Federal Cartel Office. They've been colluding to determine who should win public tenders beforehand, and now they're facing the consequences—with a little help from an informant.
The Federal Cartel Office in Bonn has slapped fines totaling 10.5 million euros on several road repair companies for these illegal price agreements. Seven firms from various federal states have been caught participating in these underhanded dealings.
The price-fixing scheme took place between 2016 and 2019. Andreas Mundt, president of the Federal Cartel Office, explained that they'd agreed, prior to tenders, on who would emerge victorious. In many instances, other companies submitted 'protective bids' with a minimum amount that had also been agreed in advance.
Competition Road construction sees a slump in orders for the construction industry is on a downturn "Effective competition is the key to ensuring public authorities can obtain goods and services efficiently," Mundt stated. However, these illegal arrangements can lead to substantial damage, which ultimately winds up being shouldered by all citizens.
Companies resort to "codespeak"
Four of the implicated companies divided up customers in Saxony, Thuringia, and Saxony-Anhalt in 2018 and 2019, using a "codespeak" to clarify who would participate in which tender and who would submit which protective bid.
Again, four companies communicated with each other in tenders in Brandenburg and Saxony-Anhalt, sometimes also in Mecklenburg-Western Pomerania. One of these companies was engaged in both instances.
The orders covered simple road repair tasks or the supply of bitumen emulsion or gravel. The order volumes typically ranged between 40,000 euros and 200,000 euros.
Along with the Public Prosecutor's Office in Düsseldorf, the Federal Cartel Office executed several raids in 2019. One company came forward within the limits of the leniency program.
Source: ntv.de, mpe/AFP
- Federal Cartel Office
- Road traffic
- Construction
- Price agreements
- The Federal Cartel Office, tasked with ensuring fair competition in business, fined several road repair companies for their illegal employment and community policies, where they colluded to influence the outcome of employment policies in the construction industry, a key sector of road traffic, thereby leading to price agreements.
- In an attempt to deceive public authorities, some of these companies resorted to an industry-specific code language, or 'codespeak', to disguise their illicit communication and collaboration that primarily involved discussing employment policies in road repair tenders and deciding on protective bids.
