On 21 February 2023, the AFCA filed an application with the Cartel Court for findings on Kostmann. The company approached the AFCA in spring 2017, applied for leniency and has since cooperated fully to clarify the facts of the case under the leniency programme (see press release of 22 February 2023). Kostmann was involved, as part of a single and continuous infringement of cartel law, in concerted practices, customer allocation and market division, as well as the exchange of sensitive information with competitors in relation to public and private tenders in the sector of building construction and civil engineering, particularly road building, in several Austrian provinces during the period from at least July 2002 to May 2017.
Considering the company size und its regional focus of activity, Kostmann was directly involved in a comparingly lesser degree. The company's involvment took place in Carinthia, Styria and Lower Austria, in regard to single cases also within other federal states of Austria, particularly in Vienna, Upper Austria and Burgenland.
Kostmann was the first of the many companies involved in the construction cartel to approach the AFCA after its first investigations. The cooperation with the AFCA provided essential information, enabling it to uncover the construction cartel and to enhance its investigations (see also “Background” below). In addition to providing additional essential information under the leniency programme, Kostmann was ready to end the proceedings conjointly with the AFCA.
The company has also accepted the facts of the case as determined by the AFCA, and did not dispute the AFCA’s legal assessment of the case. Kostmann has also introduced a certified compliance system and taken additional measures in order to avoid any breaches of cartel law in the future.
The AFCA may refrain from imposing a fine if the company complies with the leniency programme’s criteria. Since Kostmann met all of the requisite conditions, the AFCA refrained from imposing a fine on the company and only applied to the Cartel Court for a finding of the infringement.
The uncovered cartel relates to the construction industry, comprising nearly all segments in building construction and civil engineering, and was focused in particular 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, including our Leniency Programme Guidelines, can be found under the following link: Leniency