Norwegian Competition Authority is imposing fines totalling NOK 6.5 million on two companies for illegal collusion by submitting a joint bid on the collection, transport and final treatment of sewage sludge in Bergen municipality.
Johny Birkeland Transport AS / Norva 24 AS and Lindum AS are fined, respectively, 2.6 and 3.9 million Norwegian kroner for collusive bidding.
Municipal funds
These two competitors worked together to submit a joint bid with a common price in a tender organized by Bergen Vann KF (Bergen Water Municipal Company) in 2014.
– Collusive bidding is very harmful and results in the purchaser paying more than necessary. The losers are really the city residents who must pay higher fees to the city, says Head of Department Ingrid K. Gullaksen.
The price of the joint bid was also why Bergen Vann contacted the Competition Authority, which in turn led to a dawn raid on 1 October 2014.
Cooperation with the only competitor
The tender organized by Bergen Vann concerned the handling of sludge from four treatment plants split into five contracts or lots.
– According to the Competition Authority’s assessment, both companies could have competed to win the different lots, but chose instead to work together to deliver a joint bid with a common price for all the lots together. The competitors had exchanged information on prices and available processing capacity beforehand, said Gullaksen.
The companies were the only ones who were prequalified in the competition. The Competition Authority considers that the companies could fix the price in the joint bid with little risk of losing the tender.
– Cooperation reduced the number of potential or actual competitors in all the lots, and reduced the likelihood of Bergen Vann getting the lowest price for the contract, says Head of Project Rebekka Søvik