Competition watchdog fines private construction cartel €234,000

The Competition Council (KP) has found a cartel in a procurement organized by a private contractor for the construction of a manufacturing building, to which funds from the European Union (EU) funds were linked. A total of nearly €234 thousand was imposed on companies for infringement of competition law, Latvian Radio reported August 16.

The director of the KP Department of Prohibited Agreements Ieva Šmite told Latvian Radio that the procurement had an arranged winner, but two companies were merely a cover when submitting tenders. The cartel involved PK Serviss, Koro būve, and Tavs laikmets.

The infringement took the form of a banned agreement in a project organized by the private contractor, Lyngson Ltd, which was carried out with European Union co-financing of more than €780 thousand.

As a result of the activities of the participants involved in the cartel, the tenderers exchanged commercially sensitive information on unit costs, thereby excluding competition between competitors, KP said.

“We proved not only the prohibited agreement, which is a violation of competition law, but we also saw a dishonest act from the contractor itself. They had agreed previously with the winner on the co-financing and the fictitious contest as such,” Šmite said.

The procurement took place in 2016. The infringement was initially suspected by European Union structural fund auditors, who reported to KP the signs of a possible cartel, and in 2021 KP launched the case.

Since the case may also see a dishonest absorption of EU funds, its materials have been transferred to the European Public Prosecutor's Office, which in turn initiated criminal proceedings against the company's representatives. The economic operator has repaid the money received, which could be assessed as a mitigating circumstance.

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