The German Federal Cartel Office has imposed a fine of EUR 2.79 million on Strabag AG, based in the Rhine metropolis, due to prohibited agreements in the tender for a construction project in Cologne. The competition authority announced on Wednesday that the agreements were made in connection with the renovation of the zoo bridge.
Employees from Strabag AG and Kemna Bau Andreae, based in Pinneberg near Hamburg, were involved. They had agreed that Kemna would submit a protective offer during the tender in order to enable the contract to be awarded to a bidding consortium with the participation of Strabag. Kemna received compensation payments for this.
Damage amounting to several billion euros per year
According to the German Federal Cartel Office, this is a so-called bid agreement. Such illegal cartel agreements mean that procurement procedures do not lead to quality and price competition as actually intended, explained the President of the Cartel Office, Andreas Mundt. “According to estimates, bid rigging alone causes damage amounting to several billion euros per year to public sector construction projects in Germany.”
The Bonn authority explained that the proceedings against Strabag AG were triggered by an anonymous tip to the Federal Cartel Office. The proceedings against Kemna under the leniency program were discontinued because the company only made it possible to prove the crime by submitting evidence. During the proceedings, Strabag AG also cooperated with the cartel office and ultimately agreed to terminate the proceedings. The fine notice is legally binding.
According to the Cartel Office, in September 2021 there was a raid in the case, which dates back to the beginning of 2017. In December of the same year, Strabag AG became a 100 percent subsidiary of the Viennese construction group Strabag SE, which has held the majority of the traditional Cologne-based group since 1997.
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**Interview with Andreas Mundt, President of the German Federal Cartel Office**
**Interviewer:** Thank you for joining us today, Mr. Mundt. Recently, the German Federal Cartel Office imposed a fine on Strabag AG for bid-rigging. Can you explain how these agreements typically undermine competition?
**Andreas Mundt:** Thank you for having me. Bid-rigging agreements are serious violations of competition law. They essentially distort the competitive landscape of procurement procedures. In the case of Strabag AG, they colluded with Kemna Bau to manipulate the tender process for the renovation of the zoo bridge in Cologne. This meant that instead of competing fairly on price and quality, they arranged for Kemna to submit a protective bid, which ensured that Strabag would win the contract. This kind of behavior not only diminishes the integrity of the procurement process but ultimately leads to increased costs for taxpayers.
**Interviewer:** That’s a significant issue. You mentioned that bid rigging costs the public sector several billion euros each year. Can you provide more insight into how such practices impact public projects?
**Andreas Mundt:** Certainly. When companies engage in bid-rigging, it leads to inflated prices for construction projects, which means that public funds are not used effectively. This can result in subpar construction quality and delays, as the competitive environment that fosters innovation and cost-effectiveness is destroyed. We estimate that bid rigging alone causes damage amounting to several billion euros annually, undermining public trust and diverting resources away from other essential services.
**Interviewer:** The case against Strabag AG was initiated following an anonymous tip. How important are tips from the public in helping the Cartel Office uncover these illegal practices?
**Andreas Mundt:** Anonymously reported tips are crucial for our investigations. They often provide the initial leads that help us begin delving into suspected cartel behavior. In this case, the tip prompted our office to take a deeper look, leading us to uncover the illegal agreements in question. We urge anyone with information about suspected anti-competitive behavior to come forward.
**Interviewer:** Lastly, what actions can companies take to ensure compliance with competition law and avoid similar situations?
**Andreas Mundt:** Companies should prioritize fostering a culture of compliance within their organizations. This includes robust training for employees on competition law and establishing clear internal policies that discourage collusive behavior. Additionally, seeking legal advice when uncertain about competitive practices is vital. The consequences of violating these laws can be severe, as evidenced by the fine imposed on Strabag AG.
**Interviewer:** Thank you, Mr. Mundt, for your insights and for shedding light on the important work of the Federal Cartel Office.
**Andreas Mundt:** Thank you for having me. It’s essential that we continue to raise awareness about these issues to protect fair competition in Germany.
