exposing the rogue road construction cartels: Federal Cartel Office slaps hefty penalties on firms
Unlawful Accords in Roadbuilding: Federal Cartel Office Levies Millions in Penalties - Millions in Penalties Levied by Federal Cartel Office
Get ready to steer clear of shady road construction practices! A new report by the Federal Cartel Office has blown the lid off a series of cartel agreements within the industry between 2016 and 2019.
"*Before tenders, it was agreed who would win\", warns Andreas Mundt, president of the Bonn authority. In many instances, other firms would submit phony bids with amounts agreed upon beforehand, known as cover bids. "Only with competitive bidding can public authorities procure goods and services economically and cheaply," explains Mundt. But these illegal cartel agreements* can cause severe damage, ultimately affecting all citizens.
In 2018 and 2019, four companies divided up clients in Saxony, Thuringia, and Saxony-Anhalt, using a coded language to clarify who was participating in which tender and who was submitting which cover bid. This wasn't the only instance of collusion; four companies were also found to have worked together in Brandenburg and Saxony-Anhalt, as well as in Mecklenburg-Western Pomerania, between 2016 and 2019.
These shady dealings involved simple road repair measures or the provision of bitumen emulsion or gravel. Contract volumes generally ranged from 40,000 to 200,000 euros.
The tenders came under investigation in 2019, with the Federal Cartel Office and the Public Prosecutor's Office in Düsseldorf carrying out several searches. One company opted to cooperate within the framework of the leniency program.
- Federal Cartel Office
- Penalties for cartel offenders
- Collusion in road construction
- Andreas Mundt
- Questionable bidding practices
- Saxony-Anhalt
Behind the Scenes: The Underbelly of the Construction Industry
- Unfair Competition: Cartel agreements can create an unbalanced playing field, favoring large players and stifling competition, especially for small and medium-sized enterprises (SMEs).
- Taxpayer Burden: Higher construction costs stemming from these agreements ultimately fall on taxpayers, adding unnecessary expense to public projects.
- Damage to Public Trust: The revelation of these collusive practices has shaken public trust in the construction industry and government procurement processes, underscoring the need for robust competition enforcement.
The Federal Cartel Office's Crackdown
The Federal Cartel Office took decisive action against these illegal practices, imposing hefty fines on companies involved. In one egregious case in 2018, several construction firms were fined more than €160 million for violating competition law by engaging in bid-rigging cartels.
"The Bundeskartellamt also emphasized the importance of compliance programs within companies to prevent future violations. Companies that failed to implement effective compliance measures faced additional penalties."
In light of these revelations, the Federal Cartel Office has increased its scrutiny of the construction sector to ensure fair competition in public procurement processes and prevent future cartels.
- To combat the damaging effects of cartel agreements in the road construction industry, the Federal Cartel Office has emphasized the importance of implementing vocational training programs focused on ethical business practices and competition law compliance, to prevent future violations.
- The Finance ministry should allocate funds for vocational training programs in the manufacturing industry, focusing on equipping businesses with the skills needed to uphold fair competition, thereby promoting a healthy and sustainable business environment.
