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For the first time, the Norwegian Competition Authority has granted a company full leniency from administrative fines because the company notified the Authority about the illegal cooperation. (Photo: Ron Hudson / ScanStockPhoto)

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Roofing company blew the whistle on law breaking – escaped million kroner fine

Two roofing companies in the Bergen area were subject to administrative fines for breaking the competition law in connection with a bidding competition. One of the companies does not have to pay the fine because it notified the Competition Authority about the illegal cooperation.

The two companies participated in a bidding competition to roof the Norwegian Armed Forces' new administration building at Håkonsvern in the summer of 2008. During the bidding process, information was exchanged between the companies about price schedules and cost considerations related to the tender.

As a result of the illegal cooperation, Fløysand Tak AS must pay an administrative fine of NOK 350 000 for breaching the competition law. IcopalTak AS is fined NOK 1.2 million, but does not have to pay because the company notified the Competition Authority about the situation and cooperated with the Authority during the investigation.

This is the first time the Competition Authority has granted a company full leniency from administrative fines as a result of such notification.

Difficult to detect
– Whenever competitors exchange prices in connection with a tender, it is a serious breach of competition law. The price is often crucial for those who receive and  evaluate the bids. Illegal bid-rigging reduces the competition for the contract and may lead to the purchasers paying too much, says the Director General for Competition Christine Meyer.

– Although none of the companies involved in this case made any concrete gains from the illegal cooperation, it is important to crack down on such offenses. When competition is limited in this way, the damaging effects on society can be significant, she says.

– However, it is usually very difficult to detect collusion, unless we get help from the inside. So the Competition Act provides the possibility for companies that are involved in cartel activities but who break off such illegal cooperation and notify the Competition Authority, to avoid administrative fines, in whole or in part, explains Meyer.

Sent e-mail with prices
The background to the case is a tender organized by Veidekke, the main contractor for the building project, in summer 2008, in which the two companies participated. Two days before the offer deadline, Fløysand Tak sent an e-mail to the competitor IcopalTak with an attachment that laid out the unit prices and total price for the work.

– IcopalTak did not in any way distance itself or protest about the information they received in the e-mail from Fløysand Tak. To the contrary, the e-mail and pricing statement were printed out and they were later found in IcopalTak’s working folder for the project. This shows that IcopalTak was aware of the competitor's price assessments when they submitted their bid, explained Head of Section Ingrid Kjeldstad Gullaksen.

Notified Authority
The e-mail was well suited to reduce uncertainty in the tender procedure and to facilitate coordination between the two competitors. The Competition Authority has concluded that the action represents a breach of the Competition Act's prohibition against cooperation that restricts competition.

IcopalTak notified the Competition Authority about illegal coperation in February 2010. On the basis of information from IcopalTak, the Competition Authority conducted a dawn raid in which both documents and electronic material were seized. The Authority also took a number of formal statements in the case.

 

Last changed: 01/07/2011