SINGAPORE: Two construction firms have been fined S$4.6 million (US$3.6 million) by Singapore’s competition watchdog for colluding to rig bids for People’s Association (PA) projects, the Competition and Consumer Commission of Singapore (CCCS) said on Friday (May 23).
Hunan Fengtian Construction Group and Trust-Build Engineering & Construction were fined S$349,350 and S$4,295,059 respectively. The two companies have until Jul 23 to pay the penalties.
The companies were found to have coordinated bid submissions on three tenders for upgrading works at community clubs in Bukit Batok, Cheng San and Eunos in 2022.
The value of their tenders was about S$56 million (US$43 million) in total, CCCS said.
Bid-rigging occurs when suppliers collude on bid submissions for tenders. They might take turns to win a tender by agreeing on terms, or they may choose not to participate in certain tenders after agreeing who should win.
In this instance, CCCS found that Trust-Build was the identified winner, while Hunan Fengtian was the support bidder. Hunan Fengtian had prepared tender submissions on behalf of Trust-Build, even proposing its bid prices for each of the tenders.
CCCS added that Hunan Fengtian was "aware" of Trust-Build's likely bid prices and the contents of its tender submissions despite appearing to compete against the latter for the tenders.
This conduct eliminated the competitive pressure on both parties to present their best offers to PA, the competition watchdog said.
As Trust-Build's bid prices were lower than Hunan Fengtian's, they had a better chance of winning.
Such practices violate competition law, which requires businesses to act independently in the market.
The affected tenders were called between August and October 2022, and were for general construction and major repair of buildings, CCCS said.
The value of the Bukit Batok community club tender was about S$17.6 million, and had 10 tenderers. The Cheng San community club tender was valued at S$21 million and had 15 bidders.
The Eunos community club tender was valued at about S$17 million, and had 11 tenderers, but was later aborted for undisclosed reasons.
Mr Caleb Tan, deputy director of legal and enforcement at CCCS, said that the PA was "very vigilant" when they received the tender submissions. They had noticed similarities in Hunan Fengtian and Trust-Build's submissions, in terms of words and diagrams used, he added.
The PA reported the suspected bid-rigging to CCCS, with both companies subsequently excluded from the tender evaluations. None of the PA tenders were awarded to either firm.
CCCS launched investigations in July 2023 and conducted raids at the businesses of both companies in November that year. During this time, CCCS secured evidence from various sources, including WhatsApp messages between both parties.
As part of the legal process under the Competition Act 2004, CCCS issued a proposed infringement decision to both parties in October 2024, giving both parties a chance to respond before a final decision by CCCS.
Although Trust-Build faced a higher penalty than Hunan Fengtian in absolute figures, it does not mean that Hunan Fengtian was "less culpable", Mr Tan said.
Mr Tan said that the two companies were industry contacts. They had previously met at a conference and remained in touch about developments in the market.
The general manager of Hunan Fengtian had colluded with Trust-Build to try to get future business for his own company, as the company had intentions of winding down in Singapore, Mr Tan said.
For Trust-Build, the incentive was for its director to learn from Hunan Fengtian's experience in bidding for public tenders, he added.
Mr Alvin Koh, chief executive of CCCS, said that bid-rigging undermines fair competition, distorts the regular operation of market forces and prevents customers from obtaining genuine and competitive offers.
“In the context of public procurement where public funds are used, taxpayers are the ones who ultimately pay the price of such infringing conduct,” he added.
He urged businesses that are approached to take part in anti-competitive agreements to reject such offers and report them to CCCS.
The commission’s leniency programme means that parties that come forward voluntarily with information about anti-competitive agreements may receive reduced or waived financial penalties.
Whistleblowers can also provide confidential information, with rewards of up to S$120,000. They may write, email or call CCCS' hotline at 1800 325 8282.
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Hunan Fengtian Construction Group and Trust-Build Engineering & Construction were fined S$349,350 and S$4,295,059 respectively. The two companies have until Jul 23 to pay the penalties.
The companies were found to have coordinated bid submissions on three tenders for upgrading works at community clubs in Bukit Batok, Cheng San and Eunos in 2022.
The value of their tenders was about S$56 million (US$43 million) in total, CCCS said.
COLLUSION UNDERMINED COMPETITION
Bid-rigging occurs when suppliers collude on bid submissions for tenders. They might take turns to win a tender by agreeing on terms, or they may choose not to participate in certain tenders after agreeing who should win.
In this instance, CCCS found that Trust-Build was the identified winner, while Hunan Fengtian was the support bidder. Hunan Fengtian had prepared tender submissions on behalf of Trust-Build, even proposing its bid prices for each of the tenders.
CCCS added that Hunan Fengtian was "aware" of Trust-Build's likely bid prices and the contents of its tender submissions despite appearing to compete against the latter for the tenders.
This conduct eliminated the competitive pressure on both parties to present their best offers to PA, the competition watchdog said.
As Trust-Build's bid prices were lower than Hunan Fengtian's, they had a better chance of winning.
Such practices violate competition law, which requires businesses to act independently in the market.
The affected tenders were called between August and October 2022, and were for general construction and major repair of buildings, CCCS said.
The value of the Bukit Batok community club tender was about S$17.6 million, and had 10 tenderers. The Cheng San community club tender was valued at S$21 million and had 15 bidders.
The Eunos community club tender was valued at about S$17 million, and had 11 tenderers, but was later aborted for undisclosed reasons.
Mr Caleb Tan, deputy director of legal and enforcement at CCCS, said that the PA was "very vigilant" when they received the tender submissions. They had noticed similarities in Hunan Fengtian and Trust-Build's submissions, in terms of words and diagrams used, he added.
The PA reported the suspected bid-rigging to CCCS, with both companies subsequently excluded from the tender evaluations. None of the PA tenders were awarded to either firm.
INVESTIGATIONS
CCCS launched investigations in July 2023 and conducted raids at the businesses of both companies in November that year. During this time, CCCS secured evidence from various sources, including WhatsApp messages between both parties.
As part of the legal process under the Competition Act 2004, CCCS issued a proposed infringement decision to both parties in October 2024, giving both parties a chance to respond before a final decision by CCCS.
Although Trust-Build faced a higher penalty than Hunan Fengtian in absolute figures, it does not mean that Hunan Fengtian was "less culpable", Mr Tan said.
Mr Tan said that the two companies were industry contacts. They had previously met at a conference and remained in touch about developments in the market.
The general manager of Hunan Fengtian had colluded with Trust-Build to try to get future business for his own company, as the company had intentions of winding down in Singapore, Mr Tan said.
For Trust-Build, the incentive was for its director to learn from Hunan Fengtian's experience in bidding for public tenders, he added.
Mr Alvin Koh, chief executive of CCCS, said that bid-rigging undermines fair competition, distorts the regular operation of market forces and prevents customers from obtaining genuine and competitive offers.
“In the context of public procurement where public funds are used, taxpayers are the ones who ultimately pay the price of such infringing conduct,” he added.
He urged businesses that are approached to take part in anti-competitive agreements to reject such offers and report them to CCCS.
The commission’s leniency programme means that parties that come forward voluntarily with information about anti-competitive agreements may receive reduced or waived financial penalties.
Whistleblowers can also provide confidential information, with rewards of up to S$120,000. They may write, email or call CCCS' hotline at 1800 325 8282.
Continue reading...