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The Supreme Court took side of the GVH in the highway construction cartel case

By its judgement of 3 December 2008, the Supreme Court of Budapest (SCB), rejecting the claim of the plaintiffs, upheld the judgement of 2007 of the Appeal Court of Budapest (ACB) that established that the Hungarian Competition Authority (GVH) had been right. The GVH had previously established that the undertakings - Betonút Rt., DEBMÚT Rt., EGÚT Rt., Hídépítő Rt. and Strabag Rt. - which submitted tenders as a response to an invitation to tender issued in July and August of 2002 by Nemzeti Autópálya Rt. (National Motorway Corp. - NM) concluded an agreement infringing the Competition Act. The undertakings previously agreed between them about the identity of the tenderer acquiring the construction works contract for the particular motorway-sections. In some cases they even agreed that the winners would involve the others as subcontractors. Every large undertaking that could be expected to meet the conditions to be fulfilled by candidates set out in the invitation, was party to the cartel agreement. The total of the fines imposed amounted to HUF 7,043 billion (approx. EUR 27.7 million in January 2006), which have already been paid in by the infringers.

The GVH commenced an ex officio proceeding in February 2003 in order to establish whether the undertakings mentioned above colluded during the open procedure for the award of the public works contracts (with a qualitative preliminary selection of the candidates) of the NM in which the sections Balatonszárszó of the motorway M7, Becsehely-Letenye of M7-M70 and Görbeháza of M3 were put out to tender in August 2002. The proceeding was later extended to the restricted procedure in which the same works had been put out to tender in July 2002 but which was subsequently declared unsuccessful.

Based on the documents, statements and other proofs available, the Competition Council established that the firms had previously agreed between them about the identity of the tenderer acquiring the construction works contract for the particular motorway-sections and of the tenderer, which the general contractor would involve as a subcontractor in the construction works which concerned, as a total, a length of 59.91 km and a growth value of HUF 160 billion (approx. EUR 630 million). After that the first procedure was declared unsuccessful, the concurrence of wills between the tenderers manifesting in price concertation and market allocation remained unchanged for the repeated procedure too.

According to established EU-practice, the most severe sanctions are imposed on cartels of this type for they distort directly and entirely the efficient allocation of resources and result in an increase of the prices.

The market distorting effect of the collusion was significant since every large undertaking that could be expected to meet the conditions to be fulfilled by candidates set out in the invitation participated in it. The prices which came into existence under non-competitive circumstances could influence for years the prices of motorway construction works in Hungary. The Competition Council, in compliance with its earlier decisions, took into consideration that the infringement concerned the utilisation of public means. Hence, its impact seriously harmed public interest.

All the fined undertakings - Betonút Rt., DEBMÚT Rt., EGÚT Rt., Hídépítő Rt. and Strabag Rt. - appealed the Competition Council's decision at the Municipal Court of Budapest (MCB), the ACB and then the SCB. In its judgement of 23 January 2006 the MCB dismissed the appeal of them, and while the ACB found, with its judgement made on 29 August 2007, the appeals submitted against this judgement to be unfounded.

Rejecting the claim of the plaintiffs, the SCB upheld the judgement of the ACB at today-s trial.

The undertakings paid the fines imposed (in million HUF: on Betonút: 2212, DEBMÚT: 496, EGÚT: 496, Hídépítő: 1371, Strabag: 2468) during December 2005 and January 2006.

As the GVH informed the public several times before, injured parties may lodge claims for damages to civil courts in order to get compensation for the harm caused by cartel behaviour. The GVH considers these suits very important, since - as it has been shown by international experience - these actions may have serious deterrent effect on infringers.

Case number: Vj-27/2003.

Budapest, 3 December 2008.

Hungarian Competition Authority
Communications Group

Further information:

András Mihálovits
Hungarian Competition Authority
Address: 1054 Budapest, V., Alkotmány u.5.
Postal address: 1245 Budapest, 5. POB. 1036
Tel: (1) 472-8902
E-mail: Mihalovits.Andras@gvh.hu
http://www.gvh.hu

Facts and figures

I. Invitation to the tender of July 2002

  • Time of invitation: July 2002

  • Invited undertakings:
    a) Strabag Rt.,
    b) Hídépítő Rt.,
    c) Betonút Rt., és
    d) EGÚT Rt.

  • Opening date of the bids: 22 July 2002

  • Bids:

Table 1: M3 (Polgár-Görbeháza)

Candidate

Consortia

Bid/million HUF/net

Winner

M3 Görbeháza 2002 Konzorcium

EGÚT- D-Profil Kft.

15.854.361

Bihar Konzorcium

Strabag-Hoffman Rt.

16.952.395

Tiszántúli Autópálya Építő Konzorcium

Betonút- Kutas BB Kft.

18.111.234

Table 2: M7 (Balatonszárszó)

Candidate

Consortia

Bid/million HUF/net

Winner

M7 Balaton Konzorcium

Hídépítő-Strabag-Penta Kft

54.650.000

X

M7 Balaton 2002 Konzorcium

EGÚT- D-Profil Kft.

59.996.298

Balatoni Autópálya Építő Konzorcium

Betonút- MÁV Hídépítő

62.970.623

Table 3: M7 (Becsehely)

Candidate

Consortia

Bid/million HUF/net

Winner

Adria Autópálya Építő Konzorcium

Betonút- Kutas BB. Kft

14.548.765

X

M7 Zala Konzorcium

Strabag-Kaiser Rt.

15.142.041

M7 Határ Konzorcium

Hídépítő-Penta-Viadom

15.000.000

Table 4: M70

Candidate

Consortia

Bid/million HUF/net

Winner

M70 Mura Konzorcium

Strabag-Hídépítő-Hoffman

24.355.112

X

Bihar Konzorcium

Betonút-Mélyépítő Bp.

25.114.937

M70 Letenye 2002 Konzorcium

EGÚT-D-Profil

26.310.232

5. Date of declaring unsuccessful: 23 July 2002

II. Open procedure with a qualitative preliminary selection of the candidates, August 2002

6. Date of announcement: 26 August 2002

7. Candidates:

a.) Strabag (all sections),
b.) Hídépítő- Betonút konzorcium (all sections),
c.) Egút- Debmút (all sections),
d.) Betonút (by oneself M3, M7-M70 sections),
e.) Hódút (M3 sections)

8. Bids received:

Table 1: M7-M70

Candidate

Undertakings

Bid (million HUF - net)

Winner

Országhatár Konzorcium

Hídépítő - Betonút

47.240.459

X

M7-M70 Közös Vállalkozás

EGÚT- DEBMÚT

47.532.512

Strabag

Betonút- Kutas BB Kft.

44.879.608

X

Table 2: M7 Balatonszárszó

Candidate

Undertakings

Bid (million HUF - net)

Winner

Szárszó Konzorcium

Hídépítő - Betonút

65.158.566

X

M7 Balaton Közös Vállalkozás

EGÚT- DEBMÚT

70.700.538

Strabag

69.114.015

Table 3: M3 Görbeháza

Candidate

Undertakings

Bid (million HUF - net)

Winner

M3 Görbeháza 2002 Közös Vállalkozás

EGÚT-DEBMÚT

18.055.214

X

M3 Konzorcium

Hídépítő-Betonút

18.666.000

Tiszántúli Autópálya Építő Konzorcium

18.976.627