Public procurement tender published for reconstruction of the building of the Hungarian Pensions Insurance Authority
Agreement restricting economic competition
The Office of Economic Competition commenced a competition supervision proceeding against four undertakings of the construction industry on the suspicion of an agreement restricting competition.
On the trial of 2 March 2004 the Competition Council concluded as follows:
In 2001, the Hungarian Pensions Insurance Authority invited tenders in an open prequalificative process for the complete reconstruction, renovation, building contractors` and sub-construction works of its seat (Budapest VIII. Fiumei út 19/A). The tender was published in the Official Journal of Public Procurement. Baucont Rt., KÉSZ Kft., ÉPKER Kft. and Középületépítő Rt. put forward their application. The Hungarian Pensions Insurance Authority pronounced the tender to be invalid.
In 2002 the Hungarian Pensions Insurance Authority invited tenders again, this time in a two round process. The abovementioned four undertakings were putting forward their respective applications again. The Hungarian Pensions Insurance Authority ranked the applicants based on the criteria being part of the invitation to tenders and invited the three highest ranked undertakings (Középületépítő Rt., Baucont Rt., ÉPKER Kft.) to submit their bids. KÉSZ Kft. objected to the decision at the Public Procurement Arbitration Committee.
The Competition Council of the Office of Economic Competition established that Baucont Rt. and ÉPKER 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 Office of Economic Competition 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.
Later, Baucont Rt. and ÉPKER Kft. involved in their agreement the KÉSZ Kft., which, in return, withdrew its objections; thereby it became a party to the collusion. Baucont Rt. and ÉPKER Kft. also made an attempt to involve Középületépítő Rt., however, this attempt was not successful; Középületépírő Rt. did not infringe the competition law.
Baucont Rt. won the tender and it involved KÉSZ Kft and ÉPKER Kft. in the realisation of the project.
The Competition Council of the Office of Economic Competition 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 227 million 227 million (cca Euro 910000) and 136 million (cca Euro 545000) on Baucont Rt., ÉPKER Kft. and KÉSZ Kft. respectively, taking into account all the circumstances of the case.
March 2, 2004. Budapest