SINGAPORE: For colluding in high-value tenders in order to secure projects, two interior fit-out contractors were penalised nearly S$10 million (US$7.3 million) by Singapore's competition regulator, the most severe such penalty to date.
Flex Connect and Tarkus Interiors, both of which handle interior decoration and finishing works for commercial properties, were found to have engaged in bid-rigging conduct. They were penalised S$4,885,263 and S$5,113,918 respectively.
Both firms rigged bids over a five-year period, from August 2016 to August 2021, affecting 12 tenders with between S$187,000 and S$7.7 million in value, said the Competition and Consumer Commission of Singapore (CCCS) on Friday (Dec 20).
In total, the affected tenders had a value of around S$34.1 million.
The tenders were related to establishments such as retail spaces, food and beverage outlets, and offices. These included PURE Fitness at Ocean Financial Centre, Citibank at Changi Business Park, Oracle at Mapletree Business City, Ernst & Young’s premise at 77 Robinson Road and Hans im Gluck at Boat Quay and VivoCity.
To rig bids, one of the firms - designated the winner - would provide bid pricing and other details to the other firm, which would then submit a higher bid to give the "winning" firm a better chance of securing the tender.
This, said CCCS, was how the pair eliminated competitive pressure that would have resulted in them submitting best offers to customers.
"As a result of the conduct, potential customers were not able to receive truly competitive offers from (the two businesses), thus potentially overpaying for these tenders," said CCCS, which has handled seven bid-rigging cases to date, including this.
Both tried to justify their conduct by claiming that they were at risk of being excluded from future tenders if they declined to participate in a tender.
However, CCCS found that the excuse did not hold water.
"The (firms') collusive conduct effectively reduced the number of shortlisted tenderers genuinely competing and gave customers the false appearance of competition for their tenders," CCCS said.
The agency highlighted that Flex Connect - formerly known as Facility Link - and Tarkus Interior were among only 44 businesses registered under the Building Construction Authority that could bid for high-value government projects. These projects have an unlimited tender value for interior decoration and finishing works.
Investigations into the firms' conduct started in November 2020, following a tip-off from a member of the public. Digital evidence seized during a raid at the firms' business premises included copies of WhatsApp chats.
The probe Investigations exposed "numerous instances" of compromising conduct, including agreements that breached competition laws.
The Competition Act 2004 states that agreements that prevent, restrict or distort competition within Singapore are prohibited unless they are exempted in provisions.
As part of the legal process under the Act, CCCS issued a proposed infringement decision to the two firms on May 23 this year. The proposed infringement decision is a written notice that sets out the CCCS' decision. It gives the involved parties a chance to make arguments before CCCS decides whether there has been an infringement.
Each firm submitted written representations before CCCS came to its final decision.
CCCS considered each business' relevant turnover, the nature and seriousness of their breaches, and the aggravating and mitigating factors in making a decision.
Flex Connect had applied for and was granted leniency during initial investigations, and the CCCS reduced its financial penalty.
"CCCS’ leniency programme affords lenient treatment to businesses or individuals that are part of a cartel agreement or concerted practice, when they come forward early to CCCS with information on their cartel activities," said the CCCS. Such businesses may receive a full waiver or have their financial penalties reduced.
The two companies have until Feb 20, 2025, to pay their respective penalities. They also have two months from now to appeal against the decision.
CCCS' chief executive Alvin Koh said that bid rigging was a "serious infringement" of Singapore’s competition laws that harms both businesses and consumers. Such conduct distorts the competitive bidding process, drives up prices and prevents customers from getting the best value for their tenders, Mr Koh said.
"Ultimately, the Singapore consumer and society pays. To ensure our markets work well, CCCS will take firm action if we find that tenderers are colluding or participating in any anti-competitive discussions.
“CCCS advises any businesses approached to participate in anti-competitive agreements to immediately refuse and publicly distance itself from such discussions."
Those who wish to provide information on cartel activities can write, email, or call the CCCS hotline at 1800 325 8282.
Continue reading...
Flex Connect and Tarkus Interiors, both of which handle interior decoration and finishing works for commercial properties, were found to have engaged in bid-rigging conduct. They were penalised S$4,885,263 and S$5,113,918 respectively.
Both firms rigged bids over a five-year period, from August 2016 to August 2021, affecting 12 tenders with between S$187,000 and S$7.7 million in value, said the Competition and Consumer Commission of Singapore (CCCS) on Friday (Dec 20).
In total, the affected tenders had a value of around S$34.1 million.
The tenders were related to establishments such as retail spaces, food and beverage outlets, and offices. These included PURE Fitness at Ocean Financial Centre, Citibank at Changi Business Park, Oracle at Mapletree Business City, Ernst & Young’s premise at 77 Robinson Road and Hans im Gluck at Boat Quay and VivoCity.
To rig bids, one of the firms - designated the winner - would provide bid pricing and other details to the other firm, which would then submit a higher bid to give the "winning" firm a better chance of securing the tender.
This, said CCCS, was how the pair eliminated competitive pressure that would have resulted in them submitting best offers to customers.
"As a result of the conduct, potential customers were not able to receive truly competitive offers from (the two businesses), thus potentially overpaying for these tenders," said CCCS, which has handled seven bid-rigging cases to date, including this.
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Both tried to justify their conduct by claiming that they were at risk of being excluded from future tenders if they declined to participate in a tender.
However, CCCS found that the excuse did not hold water.
"The (firms') collusive conduct effectively reduced the number of shortlisted tenderers genuinely competing and gave customers the false appearance of competition for their tenders," CCCS said.
The agency highlighted that Flex Connect - formerly known as Facility Link - and Tarkus Interior were among only 44 businesses registered under the Building Construction Authority that could bid for high-value government projects. These projects have an unlimited tender value for interior decoration and finishing works.
Investigations into the firms' conduct started in November 2020, following a tip-off from a member of the public. Digital evidence seized during a raid at the firms' business premises included copies of WhatsApp chats.
The probe Investigations exposed "numerous instances" of compromising conduct, including agreements that breached competition laws.
The Competition Act 2004 states that agreements that prevent, restrict or distort competition within Singapore are prohibited unless they are exempted in provisions.
As part of the legal process under the Act, CCCS issued a proposed infringement decision to the two firms on May 23 this year. The proposed infringement decision is a written notice that sets out the CCCS' decision. It gives the involved parties a chance to make arguments before CCCS decides whether there has been an infringement.
Each firm submitted written representations before CCCS came to its final decision.
CCCS considered each business' relevant turnover, the nature and seriousness of their breaches, and the aggravating and mitigating factors in making a decision.
Flex Connect had applied for and was granted leniency during initial investigations, and the CCCS reduced its financial penalty.
"CCCS’ leniency programme affords lenient treatment to businesses or individuals that are part of a cartel agreement or concerted practice, when they come forward early to CCCS with information on their cartel activities," said the CCCS. Such businesses may receive a full waiver or have their financial penalties reduced.
The two companies have until Feb 20, 2025, to pay their respective penalities. They also have two months from now to appeal against the decision.
CCCS' chief executive Alvin Koh said that bid rigging was a "serious infringement" of Singapore’s competition laws that harms both businesses and consumers. Such conduct distorts the competitive bidding process, drives up prices and prevents customers from getting the best value for their tenders, Mr Koh said.
"Ultimately, the Singapore consumer and society pays. To ensure our markets work well, CCCS will take firm action if we find that tenderers are colluding or participating in any anti-competitive discussions.
“CCCS advises any businesses approached to participate in anti-competitive agreements to immediately refuse and publicly distance itself from such discussions."
Those who wish to provide information on cartel activities can write, email, or call the CCCS hotline at 1800 325 8282.
Continue reading...