Prosecutor to investigate alleged construction cartel

  • 2009-01-14
  • Staff and wire reports

CARTEL: Allegations of a possible cartel arose following a suspicious tender of a road construction deal at the end of last year. The case came to light shortly after the Justice Ministry drafted laws aimed at ending the practice.

TALLINN - A major Estonian newspaper has reported that the State Prosecutors Office will investigate a possible cartel in what should have been an open tender on road construction.
Aripaev, one of the largest Estonian-language dailies in the country, reported that the Harju County Court is prepared to discuss the possibility of a cartel involving AS KPK Teedeehitus, a road construction company owned by Koger and Partnerid Group.

"It happened that the organizer of the public tender noticed that the offers were quite identical and the road administration company suspected these companies in collusion. Kagu Teedevalitsus told the Competition Authority about these similar tenders, after which we started process," State prosecutor Triin Bergman, was quoted by the paper as saying. 

On Jan. 9, Andres Koger, the chairperson of KPK-s supervisory board, said he had not heard anything about the suspected cartel until the newspaper contacted him.
 Kaljuvee, member of KPK's supervisory board wasn't willing to talk about the charges, saying the company hasn't done anything illegal.
"This story is more complicated than it seems. So I don't want to say anything before the court since it may mislead you," Kaljuvee said.

The paper reported that AS KPK Teedeehitus and AS Turgel Grupp agreed on sharing the market and price-setting. The two companies allegedly discussed the price for public tender organized by Kagu Teedevalitsus. The aim of the tender done in November 2007 was to reconstruct about 10 kilometers of the Tartu-Rapina-Varska road. The two companies agreed to share the tender should they win it. They decided that KPK will make a cheaper offer in the amount of 106.9 million kroons and AS Turgel Grupp competes with 108.4 million.

The allegations came shortly after the Justice Ministry drafted a set of laws that were aimed at helping to battle cartel forming in the country.
The laws would release companies from criminal liability if they report the formation of a cartel agreement, Postimees reported earlier this year.

"As crimes, cartels are extremely well hidden," Juhan Poldroos, head of the supervision department of the competition board, was quoted as saying. "Feedback from lawyers has told us that such an option would be useful also in Estonia."
Kaja Leiger, a lawyer who specializes in competition law, was reported as saying that 90 percent of cartels in the EU are uncovered because of similar legislation.

"The current code on criminal proceedings act has only one provision that allows prosecutors to release companies that have reported a cartel agreement from liability," he said.