Two undertakings in the Homlok Group have been fined a total of HUF 1.2 billion
Budapest, 14 December 2024 - Several companies illegally colluded in the public procurement of a railway project worth tens of billions of forints near Debrecen, the Hungarian Competition Authority (GVH) has found. The GVH’s Competition Council imposed fines totaling HUF 1.2 billion on the two undertakings of the Homlok Group, which coordinated the cartel. The companies attempted to obstruct the GVH’s proceedings, their representatives did not attend the announced hearing and therefore have to pay a further HUF 25 million in fines.
In January 2023, the Hungarian Competition Authority initiated an ex officio procedure related to the public procurement tender of NIF Nemzeti Infrastruktúra Fejlesztő Zrt. for the “Partial implementation of the 2nd phase of the railway infrastructure improvements related to the development of the Debrecen North-West Economic Belt in the framework of a public works contract”. The national competition authority suspected that during the tendering procedure, certain companies had engaged in illegal collusion to fix the tender price and determine the winner.
The GVH carried out unannounced on-site inspections at the premises of the companies concerned, and obtained evidence that clearly confirmed the initial suspicion of a cartel.
The GVH revealed that during the public procurement procedure, Homlok Kft., Homlok Zrt. and Inter Mobility Kft., belonging to the same group of undertakings (Homlok Group), colluded in order to facilitate Homlok Kft.’s winning the tender in the public procurement procedure.
The companies have agreed to bid against each other in such a way that they will be selected as the winning bidder. Under the agreement, the undertakings agreed on their bid prices before submitting their bids, and the tender documents were prepared for both companies (which were expected to compete) by a procurement consultancy directly managed by the Homlok Group. Furthermore, the budgets submitted were also prepared for both bidders by an employee of the Homlok Group. During the procurement procedure, close cooperation between the companies was maintained after the bid was made, they coordinated their procedural actions with each other, and Homlok Group employees assisted in supporting Inter Mobility’s bid.
The GVH’s Competition Council imposed a total fine of HUF 1.2 billion on Homlok Kft. and Homlok Zrt. The main reason for this is that the public procurement concerned was of a high value – worth tens of billions of forints in total – and the Homlok Group had a high net turnover in the previous year.
The Homlok Group did not defend itself during the competition supervision proceedings, did not inspect the documents, but repeatedly requested a postponement to submit comments, which it did not do so within the requested time limit or thereafter. In addition, the undertaking requested an adjournment of the hearing, which was initially granted by the GVH Competition Council. However, it subsequently requested a further adjournment of the hearing by means of a request submitted in the afternoon of the day before the hearing. It became clear that the company’s conduct was aimed at delaying the GVH’s proceedings and had the exact result. The GVH’s Competition Council imposed a further HUF 25 million procedural fine on the undertakings of the Homlok Group.
The other party in the case, Inter Mobility Kft, which had a much lower net turnover in the previous year, cooperated with the Competition Authority during the procedure. The undertaking submitted a leniency application, which was accepted by the GVH’s Competition Council. The company participated in a settlement procedure and undertook to implement a compliance programme. As a result, the GVH’s Competition Council significantly reduced the amount of the fine that could be imposed on the company, so that Inter Mobility Kft. will have to pay a fine of HUF 30 million to the central budget. This shows that it pays for the companies involved to cooperate with the GVH.
Restrictions of competition in the context of public procurement and similar competitive tendering procedures are considered to be the most serious competition law infringements, which in some cases can even lead to criminal sanctions. The national competition authority therefore gives priority to the elimination of public procurement cartels. In a cartel, there is no competition at all, but an agreement between companies to decide who wins a tender. This usually results in higher prices.
The Hungarian Competition Authority has investigated several cartels in recent years. These include cartels between Danube shipping companies, road painting and road signage companies in 2023, and a cartel between road salt distributors in 2024. In addition, several similar cartel cases are currently pending before the national competition authority.
The case’s reference number is: VJ/11/2023.
GVH Public Service Communications Section
Further information:
Bálint Horváth, Head of Communication +36 20 238 6939
Katalin Gondolovics, Spokesperson +36 30 603 1170