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The CC detects Cartel in Procurement Procedures of Railway Construction and Repair



On 6 October, the Competition Council of Latvia (the CC) took a decision to fine seven companies for coordinating their actions in 29 price quotations organized by the state-owned railway company VAS Latvijas dzelzceļš. All procurement procedures were related to construction and repair works in different regions of Latvia. The CC imposed a fine in total of EUR 52 000 to all seven companies.

The CC initiated a formal case investigation after receiving a submission from the Corruption Prevention and Combating Bureau (the CPCB). The CPCB informed on a possible prohibited agreement in price quotations of VAS Latvijas dzelzceļš where companies with a support of organizer’s officials have coordinated their actions both before and during procurement procedures.

During the case investigation, the CC detected collusive tendering amongst seven companies – SIA Ogre S, SIA Dinar būve, SIA BTC, SIA Smarts, SIA PVL plussV, SIA Smartbūve and SIA KKT Construction – in total of 29 price quotations organized by VAS Latvijas dzelzceļš. All procurement procedures took place between 2011 and 2014 and were related to railway construction and repair works in the whole territory of Latvia.

Due to the information exchange of companies involved in the cartel agreement, the fair competition in the tender process was eliminated and so the organizer of price quotations did not receive competing tenders.

Both theory and practice of competition policy prove that alleged competition infringements go hand in hand with possible corruption transactions. In order to combat unlawful activities effectively and to promote fair procurement environment, the CC and the CPCB during investigations exchange information on evidences of alleged infringements within their competences. Furthermore, both authorities organize joint informative events to educate organizers of procurements on signs of cartels.

As SIA PVL plussV is aware of the essence of the infringement and commits to prevent it, while SIA BTC pleaded guilty and recognizes the need to improve corporate governance, both companies received a fine reduction.

Overall, the CC fined SIA Ogre S with EUR 6236, SIA Dinar būve EUR 700, SIA BTC EUR 20 795, SIA Smarts EUR 5256 , SIA PVL plussV EUR 3430, while SIA Smartbūve EUR 3263, and SIA KKT Construction – EUR 12 242.

 

For media inquiries

Mr Toms Noviks
Head of Communication Unit of the
Competition Council of Latvia
Phone +371 67365210 
E-mail: toms.noviks@kp.gov.lv