THE COLLUSION OF BAUCONT RT. AND KÖZÉPÜLET ÉPÍTŐ RT. IN THE BIDDING PROCESS, IN THE PUBLIC PROCUREMENT PROCESS SERIOUSLY INFRINGED ECONOMIC COMPETITION
The Hungarian Competition Authority (hereinafter GVH) commenced a competition supervision proceeding against three undertakings of the construction industry on the suspicion of an agreement restricting competition. The Competition Council of the GVH made its decision with public hearing.
In 2001, the Section of Investment of the Ministry of Public Education invited tenders in a public procurement process for the complete construction, building contractors` and sub-construction works of a multifunctional and informatics centre (University of Kaposvár Investment Project).
The tender was published in the Official Journal of Public Procurement. Baucont Építőipari Rt. (hereinafter Baucont Rt.), Klíma- Vill. Építőipari Fővállalkozási és Szolgáltató Kft. (hereinafter KÉSZ Kft.) and Középületépítő Rt. put forward their application. The Section of Investment pronounced the investment applications of the other undertakings either to be invalid or not to be serious. Two of the undertakings, namely the investment applications of KÉSZ Kft. and ZÁÉV Rt. were not suitable.
Baucont Rt. and Kész Kft. concluded a consortium agreement before the second round of the tender. The main reason for concluding the agreement was that on the one hand the headquarters of the Baucont Rt. is in Székesfehérvár (this town is quite far from Keszthely) and on the other hand Kész Kft. could not meet the financial, capacity and ability requirements and criterion without cooperating with another undertaking (hereinafter Baucont - KÉSZ Consortium).
On 19 April 2002 the Section of Investment of the Ministry of Public Education invited the abovementioned tenders for the bidding process. Középületépítő Rt., Baucont - KÉSZ Consortium were putting forward their respective applications and submitted their bids. Comparing the two applications together though the Baucont- KÉSZ Consortium (its offered price was 3.725.000.000 HUF, cca Euro 14.900.000) gave a better offer, but Középületépítő Rt. (its offered price was 4.222.887.046 HUF, cca Euro 16.891.548) offered frustration contractual penalty.
Baucont - KÉSZ Consortium won the tender. The Consortium agreement contained that sixty percent of the building contractors` and sub-construction works of the centre would be made by Baucont Rt. and forty percent would be carried out by KÉSZ Kft.
During the inspection a draft agreement was found in the Head Office of Középületépítő Rt (being established an agreement with Baucont Rt.), which contained a restrictive article. According to the draft agreement the Középületépítő Rt. would hand in a lower price offer. The agreement plan, which was found in the Head Office of Baucont Rt. during the inspection did not contain that restrictive article.
A draft contract, which was found at the same time, included another agreement. According to that draft contract either the Középületépítő Rt. or Baucont Rt. - KÉSZ Consortium wins, the winner party would provide the loosing one, with a subcontractor assignment and financial compensation.
In the course of scrutiny of other business relations of the abovementioned undertakings it turned out that Baucont Rt. and Középületépítő Rt. agreed to complete construction, renovation, contractors` and sub-construction works concerning other buildings, where they were rivals as well.
According to the statement of Építőker Kft. the fact that there was no signed contract, proofs that no contract had been concluded between the two parties. Moreover neither Építőker Rt. nor its conductors took part in any of the construction, building contractors` and sub-construction works of the Centre.
In accordance to the statement of Baucont Rt., there was no agreement or contract concluded between Baucont Rt. and Középületépítő Rt. with regard to the construction, building contractors` and sub-construction works of the Centre. The reason of their business relation was that they concluded a consortium agreement with regard to another public procurement process at the same time.
The Decision of the Competition Council
The Competition Council of the GVH established that the collusion of undertakings and the retirement from the market activity by undertakings in the bidding process, especially in the public procurement process seriously infringe economic competition. Therefore, the Competition Council imposed a fine of HUF 149 million (cca Euro 596.000) on Baucont Rt., and imposed a fine of HUF 149 million (cca Euro 596.000) on Középületépítő Rt., and dismissed the charge towards KÉSZ Kft. respectively, taking into account all the circumstances of the case.
The reasoning of the Judgement
The Competition Council of the GVH established that Baucont Rt. and KÉSZ Kft. concluded an agreement before the second round of the tender, which provided the losing party, in case the other is the winner, with a subcontractor assignment and financial compensation. The Competition Council of the GVH concluded that this behaviour not only allocated the market between the parties but also substantially reduced the risk posed to the loosing party, which constitutes an important element of economic competition. The parties` behaviour is contrary to the prohibition of the collusion between competitors concerning the bidding process.
March 18, 2004. Budapest