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Construction cartel update: AFCA applies to the Cartel Court to have a fine of EUR 9.8 million imposed on the Granit Group

As part of its successful investigations into the construction industry, the Austrian Federal Competition Authority (AFCA) filed another application with the Cartel Court on 05 September 2023 to impose a fine of EUR 9.8 million on Granit Holding GmbH and two of its subsidiaries (hereinafter referred to jointly as “Granit”).

The overall infringement comprises anti-competitive 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, particularly road building, throughout Austria during a period lasting from 2002 to 2017. Because of the company’s regional focus of activities, Granit’s involvement in the overall infringement related to eastern Austria in particular.

Following a statement of objections, Granit recognised the facts of the case as investigated by the AFCA. Granit cooperated with the AFCA outside the leniency programme to fully clarify the facts of the case, acknowledging the infringement for use in proceedings before the Cartel Court. Furthermore, the company’s introduction of a comprehensive compliance management system was also taken into account. The AFCA therefore applied for a reduced fine of EUR 9.8 million, with the involvement of the Federal Cartel Prosecutor. The company accepted the amount as proportionate.

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.