Restricted tendering may facilitate cartels. The Competition Authority has today imposed fines of several million on three undertakings participating in collusive bidding for electrical services to a health enterprise.
The Competition Authority has adopted a decision, which imposes fines on three undertakings, Arro Elektro AS/Arro Holding AS (“Arro”), Caverion Norge AS/Caverion Oyj (“Caverion”) and Ingeniør Ivar Pettersen AS/Pettersen AS (“Pettersen”), for breaches of the Competition Act by way of bid rigging.
Public funds The fined undertakings had a three year framework agreement with Vestre Viken Helseforetak in the Drammen area. Through the framework agreement the three undertakings concerned were the only permitted bidders in limited tenders for electrical services. Whenever Vestre Viken Helseforetak required electrical services, only the three pre-qualified firms would be invited to bid for the contracts.
The Competition Authority has found that Arro, Caverion and Pettersen allocated contracts between themselves from December 2012 to October 2013. The participants colluded to decide the winning bidder, whilst the customer, Vestre Viken Helseforetak, was under the impression that the bidding was competitive.
– This case shows that limiting the number of competitors in tenders may facilitate cartels, says Director General Christine B. Meyer.
This cooperation resulted in a decision among the participants as to who would win the contract in question, after which the winning undertaking was free to offer any price to the customer in the knowledge that it would not be outbid.
– Cartels are generally very harmful, and leads to customers, in the present case a health enterprise, paying more than necessary. This is a misuse of public funds, says Head of Project, Hanne Aanstad-Lund.
Fine reduction Caverion has applied for immunity (hereafter called leniency). They have only been granted a partial leniency due to the fact that the leniency application was only put forward after the Authority had been on a dawn raid. This partial leniency means that the undertaking will be granted a reduction of their fine.
– Secret collusion is difficult to detect because communication is often oral, and the participants are careful in hiding their tracks. Caverion has offered evidence that has assisted the Authority in investigating the case, and as a result, they have been granted partial leniency, says Director General Christine Meyer.
The Competition Authority has reduced Caverion’s fine from NOK 2.4 million to NOK 1.44 million.
Pettersen and Arro have been imposed fines of NOK 2.88 million and NOK 1.87 million, respectively.