Competition watchdog fines two interior-construction firms nearly S$10 million for rigging tender bids
The businesses were found to have engaged in this conduct over a five-year period, which affected 12 tenders with a total value of about S$34.1 million
TWO contractors have been fined nearly S$10 million by the Competition and Consumer Commission of Singapore (CCCS) for colluding to rig tender bids totalling more than S$34 million.
In a statement on Friday (Dec 20), CCCS said that the two companies rigged the bids for 12 separate tenders for interior fit-out construction services involving various non-residential establishments such as offices as well as retail and food and beverage outlets.
CCCS chief executive Alvin Koh said: “Bid-rigging is a serious infringement of Singapore’s competition laws that harms both businesses and consumers. It distorts the competitive bidding process, drives up prices, and deprives customers from getting the best value for their tenders.”
It typically involved one party – which would be designated as the winner – providing details such as bid pricing to the other party, which would then submit a more expensive bid to give the designated winner a better chance of winning the tender.
The 12 tenders ranged between S$187,000 and S$7.7 million in value, and in total were worth about S$34.1 million. The bid-rigging conduct took place over a five-year period from 2016 to 2021, with the CCCS investigations starting in November 2020.
Affected premises include the Pure Fitness centre at Ocean Financial Centre, Citibank’s premises at Changi Business Park, Oracle’s premises at Mapletree Business City, EY’s premises at 77 Robinson Road, and Hans Im Gluck’s premises at Boat Quay and Vivo City.
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Flex Connect was fined about S$4.9 million and Tarkus Interiors S$5.1 million. Both Flex Connect and Tarkus Interiors are among a small pool of firms eligible to undertake “high-value contracts”, CCCS noted.
This is because they are registered under L6 in the Building and Construction Authority’s (BCA) Contractors Registration System, which allows businesses to tender for government projects with unlimited tender values for interior decoration and finishing works, explained the competition watchdog. Only 44 businesses are registered by BCA at this level.
CCCS said that such conduct “eliminated the competitive pressure” between the parties to submit their best offers to potential customers.
“As a result of the conduct, potential customers were not able to receive truly competitive offers from the parties, thus potentially overpaying for these tenders,” it added.
Koh added that CCCS takes firm action against parties found to be colluding or participating in anti-competitive practices. He said that businesses that get approached to partake in such practices should “immediately refuse and publicly distance (themselves) from such discussions”.
While the parties justified their actions by claiming that they were at risk of being excluded from future tenders if they declined to participate in a tender, CCCS found that this did not justify their conduct.
“The parties’ collusive conduct effectively reduced the number of shortlisted tenderers genuinely competing, and gave customers the false appearance of competition for their tenders,” noted the competition watchdog.
As part of legal processes under the Competition Act, CCCS issued a proposed infringement decision to the parties on May 23, 2024. This is a written notice given to parties that sets out the basis for CCCS’ decision to give them the opportunity to make representations and provide other information to CCCS before it finalises its decision on whether an infringement has been committed.
CCCS said it had carefully considered the representations it received from the parties’ lawyers before reaching the infringement decision which it issued on Friday.
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