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Further GVH decisions becoming final

In recent months several decisions of high importance of the GVH became final. The Appeal Court of Budapest confirmed the decision imposing a total enforceable fine of more than HUF 1,3 billion on undertakings colluding with each other in road construction works in the countryside. It also confirmed another decision finding the undertakings - producing gas insulated high voltage electric switchgears - guilty of cartelling. The GVH won further two proceedings/cases in which it imposed substantial fines for consumer deception and abuse of dominance; the related decisions of the GVH became final too.

In case of the national road constructing cartel the GVH established on 22 September 2005 that in 2001 and 2002 the behaviour of some undertakings was capable of restricting competition in connection with the bids submitted as a response to an invitation to tender published by the Directorate for Road Management and Coordination (Útgazdálkodási és Koordinációs Igazgatóság (UKIG). The road- and bridge-building undertakings preliminarily agreed on the identity of the undertaking intended to win the given bidding process and even on that the identity of the undertakings which the winner would occasionally involve as subcontractors in the execution of the work. The total amount of fines imposed was over HUF 1,3 billion.

The behaviour of the undertakings under investigation was likely to restrict economic competition in connection with the bids submitted as a response to invitations by the Directorate for Road Management and Coordination in 2001 and 2002 to tender for the construction works as follows:

  • Main road No.47 inlet section to Debrecen, phase III,

  • Approach road between Bojt and Hencida,

  • Four-lane extension of main road No.47 section between Algyő and Hódmezővásárhely, phase I,

  • Main road No.4 section along Törökszentmiklós,

  • Main road No.61 Kaposvár Northern bypass, phase II and

  • Main road No.3 Garadna bypass.

The GVH imposed the following fines for the infringement:

  • Adeptus Rt. HUF 62,7 million

  • Betonút Szolgáltató és Építő Rt. HUF 277,8 million

  • Debreceni Mély- és Útépítő Rt. HUF 162 million

  • EGÚT Egri Útépítő Rt. HUF 72,5 million

  • Hídépítő Rt. HUF 44,7 million

  • Hódmezővásárhelyi Útépítő Kft. HUF 73,5 million

  • Hoffmann Építőipari Rt. HUF 72,9 million

  • MÁV Hídépítő Acélszerkezet, Híd és Mélyépítő Kft. HUF 22,4 million

  • Mélyépítő Budapest Építőipari, Kivitelező, Beruházó és Tervező Kft. HUF 23,8 million

  • MOTA-Engil Beruházási és Építőipari Rt. HUF 43,4 million

  • Strabag Építő Rt. HUF 335,7 million

  • Swietelsky Építő Kft. HUF 20,7 million

  • Vakond Kft. HUF 50,1 million

  • Vegyépszer Rt. HUF 51,1million.

The fines were calculated based on the total revenue of the undertakings as contactors or subcontractors resulting from the tendering announced by UKIG in 2001 and 2002. The value of the tenders concerned by the infringement was around HUF 13,7 billion.

The Municipal Court of Budapest, acting as a court of first instance held two hearings, and on 31 October 2007 it dismissed the appeal of the road-building undertakings. According to the Court, the GVH was right to state that the undertakings entered into a prohibited agreement that restricted competition and to impose fines amounting to over HUF 1,3 billion. In mid October the Appeal Court of Budapest, by its legally binding judgement, also dismissed the appeals.

The other cartel case was initiated in the European Union. It had been detected in the course of the investigation that the undertakings against which the case was brought, had agreed between them in writing in 1988 to mutually inform each other about the tender invitations announced for purchasing high voltage, gas insulated switch gears and to allocate the order between each other based on predetermined quotas. Pursuant to the agreement, the Japanese undertakings did not sell their products on the European market and the European undertakings did not set off for Asian orders. The producers usually also allocated bids announced on the European markets between each other. Members of the cartel met on a regular basis. They coordinated their sales strategies and their bids submitted in response to invitations for tenders on an executive officer level. To keep their collaboration secret, the undertakings engaged in the cartel ran a complex self-protection system. They used codes, anonymous email addresses and they also encoded the electric messages. The members had access to emails on such computers that could not be identified as computers belonging to them. The information provided by ABB had been completed by evidences found at inspections without any preliminary notification by the European Commission. The case was also investigated in Hungary. In the proceeding that was launched upon a leniency request of ABB, the GVH imposed a total fine of HUF 702 million on members of the cartel since the undertakings concerned also collaborated with each other in connection with the tendering in Hungary.

The Municipal Court of Budapest, acting as a court of first instance amended the decision of the GVH by decreasing the amount of the fines imposed by the Authority: The HUF 159 million, HUF 440 million and HUF 80 million fines imposed on VA Tech T&D GmbH, Alstom Holding S. A. and Siemens A. G. were reduced to HUF 27,3 million, HUF 147.38 and HUF 29.25 respectively. The Appeal Court of Budapest upheld the decision of the Municipal Court of Budapest in September.

Further two cases were closed with the decisions of the GVH becoming final. The cases had been initiated against consumer deception and abuse of dominant position and closed by the GVH imposing high fines. Magyar Telekom was found guilty by the GVH, since the undertaking published deceptive information about tariffs of the Relax package in June and July 2004. Therefore the telecommunication company was fined HUF 40 million. The Municipal Court of Budapest dismissed the appeal of the plaintiff in the first instance on its trial held on 5 November 2007 and thereby upheld the decision of the GVH. The Appeal Court of Budapest, by its legally binding judgement, confirmed the decision of the Municipal Court on its trial held on 1 October 2008.

As an antecedent of the other suit in which the decision of the GVH was upheld in the second instance, the GVH established that DÉMÁSZ abused its dominant position when

  • it subjected the approval of the execution plan for the update of public lighting to agreeing in proprietary and operational questions in addition to technical and security-related aspects;

  • it only gave its consent to the execution of public lighting update on condition that Közvil Rt. bought its lamps that were to be disinstalled;

  • it set back without due reason the conclusion of contracts necessary for the provision of updated public lighting service;

  • for those municipalities at which DÉMÁSZ is in charge of the update of public lighting, it undertook to supply electric energy and provide trouble shouting services under unusually favourable conditions that it did not offer to other municipalities that charged other undertakings with the updating;

  • with certain municipalities, it entered into all-inclusive long-term agreements on the provision of public lighting services through the penalty clauses of which it prevented the municipalities in question from, or at least restricted them in purchasing, in their respective capacities as entitled consumers, electricity for public lighting from other undertakings.

Therefore the GVH imposed a fine amounting to HUF 45 million on the electric energy supplier. The Municipal Court of Budapest upheld the decision in the first instance in a repeated proceeding in 2007 and the Appeal Court of Budapest dismissed - with its binding judgement - the appeal of the plaintiff in mid September and thereby confirmed the decision of the GVH.

Case numbers: Vj-176/2001, Vj-56/2004, Vj-102/2004, Vj-130-2004.

Budapest, 11 November 2008

Hungarian Competition Authority
Communication Group

Further information:

András Mihálovits
Hungarian Competition Authority
Address: 1054 Budapest, V., Alkotmány u.5.
Postal address: 1245 Budapest, 5. POB. 1036
Tel: +36-30 618-6618
Email: Mihalovits.Andras@gvh.hu