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AFCA files application to fine four construction companies for price fixing, market division and other anti-competitive conduct

The alleged infringements include price fixing, market divison and the exchange of competitively sensitive information.

On 29 October 2020 the Austrian Federal Competition Authority (AFCA) filed an application with the Cartel Court to impose a fine on four companies (a parent company and three subsidiaries). The AFCA suspects that the companies have entered into agreements and engaged in collusive behaviour in relation to invitations to tender for construction and civil engineering contracts.

The alleged infringements include price fixing, market division, and the exchange of competitively sensitive information, as well as the formation of anti-competitive working groups and bidding consortia. The concerted practice seems to have taken place during the period from at least 2002 until 2017. The infringements concern multiple invitations to tender, with contract volumes ranging from EUR 50 000 to EUR 60 million.

Economic sector concerned: construction industry

Specifically, the economic sector concerned included the planning and execution of construction projects above and below ground.

The above-ground construction projects primarily related to the following types of building work:

  • Office and residential buildings
  • Cemeteries
  • Barracks
  • Power stations
  • Prisons
  • Car parks
  • Parks
  • Schools
  • etc.

The underground construction projects primarily related to the following types of project:

  • Road building, e.g. extension and maintenance of motorways
  • Bridge construction
  • Earthwork construction
  • Track construction and railway stations
  • Canal construction
  • Pipeline construction
  • etc.

Potentially damaged parties

Public clients such as federal, provincial or local governments award contracts to construction companies after putting them out to tender in accordance with public procurement law. These construction contracts are ultimately paid for by taxpayers. However, since cartel agreements lead to competition being eliminated or reduced, the public clients risk having to pay higher prices for those contracts. Higher costs mean increased public spending, which, in turn, places a burden on taxpayers.

The potentially damaged parties include federal, provincial and local public-sector entities and private companies.

Investigations conducted by AFCA

The AFCA carried out several dawn raids at construction companies in the spring of 2017; a large quantity of paper documents and IT data was secured during those raids. Investigations are currently ongoing in relation to further companies, with additional applications to the Cartel Court expected in the near future.

Fines for cartels

The Austrian Federal Cartel Act prohibits any behaviour that may prevent or distort 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.