On 27 October 2022, the Austrian Federal Competition Authority (AFCA) filed an application with the Cartel Court to have a reduced fine of EUR 27.15 million imposed on Swietelsky AG as well as its subsidiaries C. Peters Baugesellschaft m.b.H. and Kontinentale Baugesellschaft m.b.H. (hereinafter referred to jointly as “Swietelsky”) (press release of 28 October 2022). The Cartel Court imposed a fine of 27.15 million on Swietelsky. The decision is final.
The company was found to have committed a single and continuous infringement of the ban on cartels during the period from at least July 2002 to October 2017, with the infringement taking the form of illegal price fixing, market divisions and the exchange of information with competitors in relation to public and private tenders in the sector of building construction and civil engineering in many areas of Austria.
Following initial investigations, Swietelsky promptly approached the AFCA back in the summer of 2017, making it the second Austrian construction company to do so. The company has since cooperated continuously and fully under the leniency programme. Swietelsky has also fully acknowledged the infringement by accepting the AFCA’s statement of facts as well as the amount of the fine and by not disputing the AFCA’s legal assessment of the case (press release of 21 July 2022).
Granting leniency
The AFCA may refrain from applying for the imposition of a fine on a company if that company is the first competitor involved in a cartel to approach the Authority and if it fulfils all the other criteria for the leniency programme.
For every other company that subsequently approaches the AFCA with the aim of becoming a leniency recipient, the Authority may apply for a reduced fine if the company provides information and evidence that offer significant additional value compared with the material already in the AFCA’s possession. Swietelsky was granted leniency due to this condition being met in its case.
Background
The uncovered cartel relates to the economic sector of construction (building construction and civil engineering), with a particular focus on road building projects.
The infringement covers the entire Austrian territory, albeit to varying degrees depending on the company involved. Numerous public and private clients were affected by these practices, as well as a large number of construction projects. The AFCA is still investigating many of the companies with alleged involvement. Some of the proceedings have meanwhile been finally concluded.
The companies involved in the infringement engaged in concerted action in order to help each other to win construction contracts, thereby securing market shares and utilising their capacities accordingly, among other things. To reach this common goal, they engaged in illegal price fixing and market divisions, exchanged competitively sensitive information – relating for example to agreements on future behaviour when submitting bids – and in some cases they formed anti-competitive working groups and bidding consortia.
The involved companies also agreed on which bidder should win the contract, the price to be offered and the submission of bogus offers, as well as arranging that some competitors would not submit any bid at all. The arrangements for such bogus offers were made during rounds of talks among the competitors or at bilateral meetings.
FAQ Construction cartel update September 2023
For further information and the latest developments regarding the construction cartel, please refer to our FAQ Construction cartel update September 2023.
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 generated in the preceding business year if that entity is found to have breached the rules banning cartels. Fines are determined on the basis of the gravity and duration of the breach, the degree of fault, and the economic strength and cooperation of the company concerned.
AFCA’s leniency programme
All relevant information on our leniency programme can be found under the following link: Leniency