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AFCA files second application to fine another seven companies in construction cartel

The Austrian Competition Authority filed first applications against 4 construction companies in October 2020.

On 9 April 2021, the Austrian Federal Competition Authority (AFCA) filed another application with the Cartel Court to impose fines on seven companies from an Austrian construction group for taking part in the construction cartel. The AFCA suspects these companies of having been part of an Austria-wide cartel in the construction sector. The alleged anti-competitive arrangement covers several thousand tenders, with most of the individual contract volumes ranging from EUR 50 000 to EUR 60 million.

The cartel extended to the whole of Austria. The companies concerned are not cooperating under the leniency programme.

In October 2020, the AFCA had already filed applications to impose fines on four other companies from another construction group.

The cartel arrangement

The alleged cartel existed between at least 2002 and 2017. More than 40 construction companies are suspected of having taken part in the cartel.

The AFCA accuses the members of the cartel of having lessened or precluded competition in the construction sector in order to help each other obtain contracts, to reduce uncertainties relating to their future business conduct and thereby to secure or increase their market shares and margins. To this end, the construction companies fixed prices between 2002 and 2017, divided up customers and markets, and exchanged competitively sensitive information. The arrangements were made between two construction companies as well as in larger groups. The cartel members met regularly and also kept in touch by e-mail and telephone.

Economic sector concerned

Specifically, the economic sector concerned includes the planning and execution of building construction and civil engineering projects.

The civil engineering projects primarily relate to the following types of work:

  • Federal roads (motorways and trunk roads)
  • Provincial roads
  • Municipal roads
  • Private roads and car parks
  • Bridge constructions
  • Sewer and pipeline constructions
  • Earthworks
  • Track constructions.

The building construction projects primarily relate to the following types of building work:

  • Private office and residential buildings
  • State schools and nurseries
  • Health centres
  • Filling stations
  • Power stations.

AFCA investigations into construction sector

In spring 2017, the AFCA conducted dawn raids at several construction companies as part of its investigation into potential anti-competitive arrangements, in the course of which it impounded large amounts of data. In autumn 2019, the AFCA submitted its initial statement of objections to the companies concerned. A statement of objections is a formal step in AFCA investigations informing the parties concerned in writing of the objections raised against them. Investigations into the other participating companies are ongoing, and will lead to further applications in due course.

Potentially damaged parties

Potentially damaged parties of the alleged construction cartel are in particular federal, provincial and local governments, as well as public and private companies. These parties may bring actions for damages before the civil courts. A cartel among competitors is assumed by law to cause damage. According to the Cartel Act, Cartel Court decisions are proof of competition law having been broken. A fine imposed by the Cartel Court will not be offset against damages. The damages payable can only be precisely assessed after a final decision from the court. Damages are not determined in proceedings before the Cartel Court; the damaged parties must claim damages in a separate legal action.

Fines for cartels

The Austrian Federal Cartel Act prohibits any behaviour that prevents or distorts competition. This covers price fixing agreements or the division of markets or territories. At the AFCA’s request, the Cartel Court may impose fines of up to 10% of an entity’s total turnover recorded in the preceding business year if that entity is found to have breached the rules banning cartels. Fines are assessed considering the gravity and duration of the breach, the degree of fault and the economic strength of the company concerned.