Manufacturers once again under the "microscope" of the Competition Commission
The "work" of the Competition Commission's investigations in the construction industry is not new, in fact, it is very old.
The Competition Commission is examining the construction sector by initiating the regulatory intervention procedure provided for in Law 3959/2011.
The "search" of the committee in this crucial sector of the Greek economy, which from time to time has received a lot of funds, has been going on since the beginning of the 2000s.
Specifically, in 2012 the committee came up with a conclusion for the creation of a "cartel" in the construction sector during the period from 2002 to 2009. The relevant ex-officio investigation of the Directorate-General for Competition was carried out after numerous publications in the press, regarding high real estate prizes, along with the announcement in the Hellenic Building Constructors Association (EKKE) webside, which stated: "COLLEAGUES do not proceed with the construction of new buildings, if you have not previously made available 70% of the properties you have for sale."
As pointed out in the suggestion, the results of this ex-officio research showed that the EKKE, through ongoing decisions / recommendations to its members between 2002 and 2009, helped to limit the production and distribution of newly built surplus housing and in the indirect fixing of their prices, which constitutes an infringement and a serious restriction of competition. With these actions, EKKE substituted the risks of business activity with the ultimate goal of maintaining the sale prices of homes at high prices.
A few years later and specifically in March 2017, the case of the cartel in the construction industry was completed after an investigation by the Competition Commission. In fact, in this case, the fines for the "big players" of the industry fell like the rain, reaching € 80 million. In this case both domestic companies and foreign technicians who had refused to attend the settlement process were the leads. For the Greeks, the Competition Commission imposed record fines - the highest in relation to similar cases in Europe - to ELLAKTOR, GEK TERNA, J&P AVAX and Intrakat. The Competition Commission's investigation had revealed that the companies involved, agreed and pre-decided the outcome of each tender.
In particular, they co-decided:
a) Who would be the bidder and would get the project.
b) What discounts would be offered and at what contractual price would the assignment be made.
c) Which contractors would not participate in the tender and would receive financial compensation from the contractor
d) Companies that participated in seemingly competitive schemes and submitted separate bids, ended up sharing the project
The consultations took place either through regular meetings, or even through the conclusion of private agreements, which were identified during the EA investigation.
Initiation of procedure no. 11 of Law 3959/2011
On January 8, 2021, the Competition Commission took, within its competences, a decision to initiate the procedure of no. 11 of L.3959 / 2011 (regulatory intervention in a sector of the economy). In particular, as said in a statement, it decided to launch the process in order to examine the construction industry, with an emphasis on economic activities related to the development of construction and infrastructure projects (including concessions), and to assess whether conditions of effective competition prevail.
The importance of the construction sector for the Greek economy and the interconnection of the construction activity with other industrial sectors and commercial activities constitute key factors of activation of the regulatory competence no. 11 of the Competition Commission. In addition, the Competition Commission, applying national and EU competition rules, has been systematically involved with the industry, issuing over the last four years important decisions in the context of examining anti-competitive practices (distortion of public tenders) adopted by companies in the industry. In the context of these decisions, the Commission took into account the prolonged economic crisis in Greece which affected, among others, the economic sector of construction.
If, as part of the initiated procedure, it is first established that there are no conditions of effective competition in the industry under investigation, the Competition Commission will make its views public, through a public consultation within 90 days of the initiation of this procedure. The public consultation will last at least thirty (30) days.
After the end of the public consultation and if the Competition Commission finds again that there are no conditions for effective competition in this sector of the economy, it announces concrete measures which it considers to be absolutely necessary, appropriate and in accordance with the principle of proportionality, to create conditions of effective competition. The Competition Commission shall adequately and appropriately make public its views on the measures it announces and put them up for public consultation. The public consultation lasts at least thirty (30) days.
The Competition Commission, after the end of this consultation and after taking into account its results, will proceed with its decision, which is of enforceable nature, to specific measures which it deems to be absolutely necessary, appropriate and in accordance with the principle of proportionality, to create conditions for effective competition. If the Competition Commission finds that the lack of conditions for effective competition is due, inter alia, to laws and regulations, it will give an opinion on their abolition or amendment to the Minister in charge and to the Minister of Development and Investment.