By Nikolaos Theodorakis
On 18 May 2016, the Hellenic Competition Commission (HCC) issued a statement of objections addressed to undertakings active in the construction sector regarding an alleged infringement of Article 1 of the Greek Competition Act (Law 703/1977 as amended by Law 3959/2011) and Article 101 of the Treaty on the Functioning of the European Union. This is the largest investigation HCC has launched in its history.
The ex officio investigation pertains to alleged collusion regarding tenders for public works of infrastructure. This includes road construction, rail transport, metro rail and concession projects (public-private partnerships). The statement of objections includes several companies that allegedly participated in illegitimate behavior, including Greek construction giants like Ellaktor, J&P-Avax, Gekterna, Aegek, Technical Olympic, and Intrakat. The investigation includes varying starting points ranging from 1989 to 2016 and examines aspects of bid-rigging for public construction works.
The statement of objections overall alleges that a group of companies, including inter alia Siemens, FCC, and Hochtief, each participated in individual anti-competitive tenders, and for varying time-periods, in the said collusive scheme. It also mentions that other companies participated in the illegal agreements, yet too much time has lapsed so that it can impose fines.
The investigation alleges that the implicated construction companies coordinated their business conduct when bidding for tenders, so as to maximize their profit. In doing so, they allegedly submitted cover bids and agreed amongst them beforehand as to who will be the one to submit the winning bid. They also allegedly fixed the level of bids and suppressed bids in return for monetary compensation. They are also accused for agreeing to execute sub-contracts before submitting their respective bids or alternatively from withdrawing from bidding in return for jointly executing the respective works.
According to the statement of objections, this collusive scheme was implemented through regular meetings of representatives of the implicated competing undertakings and/or the conclusion of compensatory contracts. One of the construction companies, Technical Olympic, assisted in substantiating the infringement by submitting a leniency application. This application came as a result of the dawn raids conducted by the Hellenic Competition Commission back in February 2013. During the raid, HCC confiscated documents, correspondence, and hard disk drives.
Ultimately, the investigation explores potential competition distortions over a series of years, as well as the damage that the Greek public sector has suffered, as a result. In fact, there are fears that, if allegations prove correct, the European Commission will demand that funds are to be returned to Brussels due to this market distortion since some of these projects had European funding.
Construction companies are currently preparing their line of defense. As a preliminary point, they posit that the Greek legal framework for public tenders endorses, or even requires, cooperation between the bidders. A contrario, these practices are anti-competitive pursuant to the competition legal framework. Construction companies claim that they faced this controversial legal framework and that they did not aim to violate the law.
On a related note, right after the HCC launched this case, the Greek government introduced a new bill before the parliament, seeking to decriminalize all cartel infringements. In particular, the proposal suggests discarding criminal liability for companies that pay fines. This would further extend to other types of criminal conduct that go beyond the antitrust offense of bid-rigging, for instance fraud during public tenders.
As the draft stands, only companies that pay fines are absolved of criminal liability. This creates certain lacunas since, taking the current investigation as an example, the lenient applicant Technical Olympic would still be exposed to criminal liability as it will not be called to pay a fine due to it having blown the whistle.
The Hellenic Competition Commission will convene on 21 July to allow the companies to answer to the allegations. The case files are considered rather voluminous and they comprise approximately 1,000 pages per company. It is noteworthy that the HCC has practically included all the construction companies that were active in the Greek market in its statement, namely more than 60 construction companies, out of which 20 are foreign based.
It is reminded that the statement of objections is not binding to the Hellenic Competition Commission. The Commission will decide upon the case after having considered all the evidence and the arguments that all the implicated parties will put forward.