Fines imposed for concluding agreements in the industrial construction sector

The Bundeskartellamt has imposed fines totalling approx. 12.5 million euros against Aktien-Gesellschaft der Dillinger Hüttenwerke (Dillinger Hütte) and Hochtief Solutions AG (Hochtief) for concluding illegal agreements within the context of award procedures. In the early 2000s, a representative of a Saarland-based industrial construction company which has meanwhile been liquidated had concluded an agreement with representatives of Dillinger Hütte, the potential contracting party, while at the same time also reaching an agreement with representatives of Hochtief, the construction company’s main competitor in the award procedure for the contracts in question. The agreements fined by the Bundeskartellamt covered the period from early 2010 until March 2014.

Andreas Mundt, President of the Bundeskartellamt: “This case breaks new ground for us as this is the first time we have uncovered an agreement concluded within the context of an award procedure in which both the bidders and the contracting party participated. The case shows that not only agreements among bidders, but also contracting parties which participate in the agreements will be punished by substantial fines. If those responsible undermine the principle of economical and efficient procurement, they not only cause harm to other bidders, but also to their own company. We worked closely with the prosecuting authorities in Saarland to investigate the infringements.”

The illegal agreements on the award of contracts represent what is referred to as vertical and horizontal bid rigging (the term vertical refers to the relationship between the bidder and the contracting party, the term horizontal to the relationship between bidders).

The vertical agreement was implemented by using the following measures (inter alia): The representatives of Dillinger Hütte’s division for new construction work invited fewer companies to submit a tender than was provided for by the company’s internal procurement rules. Or, in addition to the Saarland-based industrial construction company and Hochtief, they only invited companies that could clearly be expected to submit non-competitive tenders. These measures were implemented with the aim to exert influence over the award procedure to ensure that if the representative of the Saarland-based company wished to obtain the contracts in question, they would be awarded to his company. If his company was not able to manage the contracts, for example due to capacity constraints, most of them were to be awarded to Hochtief, provided that Hochtief proved to be cooperative.

At the same time, and in addition to the vertical bid rigging agreement, the representative of the Saarland-based industrial construction company concluded a horizontal bid rigging agreement with representatives of his competitor Hochtief: They provided him with information about Hochtief’s pricing behaviour, which enabled him to adjust his company’s bids to be above or below Hochtief's bids in tender procedures conducted by Dillinger Hütte, based on whether or not he wished to obtain the contract for his company.

The representatives of the Saarland-based industrial construction company, Dillinger Hütte and Hochtief were prosecuted by the Saarbrücken public prosecution office; the Bundeskartellamt proceeding was initiated in May 2017 after the authority had also received information from the prosecuting authorities in Saarland.

The fine imposed on Dillinger Hütte is now final. Hochtief has appealed the order imposing its fine and the Bundeskartellamt’s findings on which the authority’s decision is based to the Düsseldorf Higher Regional Court. Both Dillinger Hütte and Hochtief cooperated with the Bundeskartellamt in clarifying the facts of the case and filed a leniency application. Furthermore, Dillinger Hütte agreed to a settlement.

A case summary in accordance with Section 53(5) of the German Competition Act (GWB) will be published shortly on the Bundeskartellamt’s website.