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Competition Council fines 26 construction companies for participation in a cartel



On June 17, the Competition Council (CC) took a decision to fine 26 construction companies for bid rigging altogether in more than 300 procurements of electro-construction works. The total fine was set at the amount of 2 862 188 EUR (2 011 557 LVL).

As a result of this cartel, competition was distorted in 316 procurements organised by state owned energy utility companies AS Latvenergo/AS Sadales tīkls, in three procurements organised by a state railroad company VAS Latvijas Dzelzceļš, in two procurements organised by SIA LatRostTrans and in a procurement organised by CBF SIA Binders. These clients purchased construction works of electric installations and infrastructure (e.g., power line installation, repair, and modernization). Works were located mainly in eastern and northern parts of Latvia, and the values varied from several thousands to 150 thousands LVL.

The companies fined had concerted their practices from 2006 to 2011, when the CC initiated the infringement case. The bid rigging was implemented by exchanging information on prices – a market participant who had previously agreed to win the procurement either sent its bid to competitors and asked them to make their bids higher or gave its competitors the exact number they should bid or in some cases even made documents of bidding estimates and asked the competitors to sign them.

The fines for competition law infringements are calculated as percentage of undertakings’ net turnover of previous financial year, taking into account the length and severity of the infringement. Thus higher fines were set to those undertakings who had participated in more cartelised procurements. Percentage of the highest fines in this case was also the highest that the CC had ever applied.

Cartel participants, fine (in percentages of previous financial year net turnover), fine (LVL):

SIA Austrumu Energoceltnieks” (SIA „Būvenergoserviss”)

7.5%

41 957

SIA „RIO”

7.5%

194 171

SIA „Daugavpils Energoceltnieks”

7.5%

57 559

SIA „SZMA”

6.5%

73 996

SIA „Vidzemes Energoceltnieks”

6.5%

471 106

SIA „Darleks”

6.5%

22 098

SIA „ELPOLI”

5.5%

27 110

SIA „ELBRA”

4.6%

37 326

SIA „Latgales Elektromontāža”

4.5%

25 211

Alūksnes rajona SIA firma „Alūksnes Energoceltnieks”

4.5%

64 056

Rēzeknes pilsētas PMK SIA "Energoceltnieks"

4.5%

6 239

SIA „Farads”

3.5%

51 966

SIA „Firma „Spriegums””

3.0%

15 761

SIA „EMPOWER”

3.0%

303 638

SIA „Aiviekstes Energobūvnieks”

3.0%

117 991

SIA „DEMP”

2.5%

544

SIA „Rīgas Energo Būve”

2.0%

771

AS „SZMA V”

2.0%

53 875

SIA „Latvijas Energoceltnieks”

1.9%

309 362

SIA „OMS”

1.5%

30 345

SIA „BESECKE”

1.5%

40 860

SIA „TELMS”

1.5%

37 228

SIA „INSTEL”

1.5%

2 566

SIA „MCD”

1.5%

8 505

SIA „J.E.F.”

1.5%

16 540

SIA „Krāslavas Energoceltnieks”

1.5%

776

 

Within its decision the CC also expressed that the actions of procurement organisers AS Latvenergo/AS Sadales tīkls had not promoted fair competition in the market. To the contrary, by ignoring similarities in actions of procurement contestants, by having close contacts with representatives of particular procurement contestants, and by asking for certain number of participants in each procurement, they had contributed to the motivation of market participants to imitate competition.

Initial information on the alleged infringement the CC received from the Corruption Prevention and Combating Bureau (CPCB). This institution had also initiated criminal investigation against officials of AS Latvenergo and AS Sadales tīkls. During the case investigation the CC found that even more construction companies had participated in the cartel than it could be seen from the CPCB’s data.