Three firms fined over S$600,000 for rigging F1 bids

Singapore

THE Competition Commission of Singapore (CCS) has fined three corporate entities more than S$600,000 for being involved in rigging the bids for a tender for the Formula 1 Singapore Grand Prix.

Contractor group Cyclect, which consists of Chemicrete Enterprises, Cyclect Electrical Engineering and Cyclect Holdings, received the heaviest penalty for its role in the bid-rigging.

HPH Engineering and Peak Top Engineering were also fined for infringing Section 34 of the Competition Act.

The CCS initiated investigations after it received a complaint in relation to possible collusion and/or bid-rigging for the F1 tender for providing electrical services, as well as a tender for asset-tagging services for international school GEMS World Academy.

On April 23, 2015, Cyclect Electrical won the three-year contract for the Singapore Grand Prix after colluding with HPH and Peak Top, which inflated their bids by 25 to 30 per cent above that of Cyclect Electrical's, the CCS said. Chemicrete, a unit of Cyclect Group, also put in a bid.

Cyclect Electrical's bid was also 10 to 20 per cent above the winning bid for the previous F1 tender spanning 2011-2014, which it also won. However, that increase could have been due to other factors, including labour costs, the CCS highlighted.

Meanwhile, for a separate tender seeking asset-tagging services for the GEMS World Academy campus in Yishun, Chemicrete won the contract on March 31, 2015 after seeking HPH's assistance to support it by submitting a higher quote, the CCS said.

GEMS received a total of three quotes, including quotes from Chemicrete and HPH. In this case, HPH's inflated bid was 50 per cent higher than Chemicrete's.

The CCS fined Cyclect Group S$559,297 for the F1 tender and S$12,000 for the GEMS tender. The fines took into account a discount for leniency after the group came forward to provide the CCS with information to help with its investigations.

The discount for leniency can be up to 50 per cent, said the CCS, without disclosing the exact figure.

HPH was hit with a penalty of S$28,128 for the F1 tender and S$5,000 for the GEMS tender; Peak Top will have to pay a penalty of S$21,693 for the F1 tender.

The firms have two months to file an appeal.

The investigations, which, among other things, included inspecting the premises of Chemicrete and Cyclect Holdings, yielded evidence such as documents from key personnel at the companies and representations from the Cyclect Group.

There was also a WhatsApp message from an executive director at HPH sent to Chemicrete's general manager on Dec 10, 2014, which read: "Bro, have you check with your md (managing director) on the Grand Prix tender. How he want to work together. Or he want me to submit a bogus price only. Please advise."

Toh Han Li, chief executive of the CCS, said: "Bid-rigging is one of the most harmful types of anti-competitive conduct as it distorts the competitive bidding process, preventing businesses from getting the best value for their tenders."

He suggested that bidders educate their employees through compliance programmes. In addition, tendering companies can try to open the tender to as many bidders as possible to minimise bid-rigging, such as through e-procurement or breaking up the tender into smaller parcels.

In a statement, managing director of Cyclect Group, Melvin Tan, said: "We have never intentionally worked against industry practices. We have cooperated to the best of our ability during the investigations.

"Hence, this decision came as a shock to us. We are currently reviewing the decisions with our legal advisors and will be keeping all our options open, including an appeal."

HPH and Peak Top did not respond to queries from The Business Times.