Clifford Chance

On 6 November 2024, the German Federal Cartel Office ("German FCO") announced that it has imposed a fine of EUR 2.79 million on Strabag AG ("Strabag") for collusive tendering (so called bid rigging) in relation to the renovation of Cologne's Zoobrücke bridge.

Strabag, a German construction company primarily engaged in road construction, was investigated following an anonymous tip-off to the German FCO's whistleblowing system. This had led to a dawn raid conducted in cooperation with Cologne's Criminal Investigation Department and the Cologne Public Prosecutor's Office in September 2021.

According to the German FCO's announcement, Strabag had reached an agreement relating to the renovation of Cologne's Zoobrücke bridge with Kemna Bau Andreae GmbH & Co. KG ("Kemna"), another road construction company, in 2017. Kemna had agreed to submit a deliberately overpriced cover quote in the tender procedure to ensure that a bidding consortium involving Strabag would be awarded the contract. In return, Kemna had received a compensation payment.

Bid rigging in tenders or auctions can take various forms, such as one party refraining from submitting a competitive bid or submitting a deliberately overpriced bid to ensure that a different party is awarded the contract. Such agreements are designed to suspend price competition and inflate price levels, and are considered as one of the most serious restrictions of competition under Section 1 of the German Act Against Restraints of Competition and the EU rules against anti-competitive agreements under Art. 101 of the Treaty on the Functioning of the EU.

A notable aspect of bid rigging, unlike other cartel infringements, is that it might constitute a criminal offence even in jurisdictions where cartel activity is otherwise not criminalised, such as in Germany, Austria, Italy, Poland and Hungary.

In Germany, bid rigging is subject to criminal penalties under Section 298 of the German Criminal Code (Strafgesetzbuch or "StGB") which can result in fines or imprisonment of up to five years. The criminal offence applies to both public and, under certain conditions, private tenders. An interesting procedural point regarding Section 298 StGB is that the German FCO is responsible for prosecuting the undertakings, while the Public Prosecution Office handles the prosecution of the individuals involved. Therefore, the German FCO and the competent Public Prosecution Office collaborated in the case at hand, as demonstrated by the joint dawn raid.

When setting the fine against Strabag, the German FCO took into account the company's cooperation during the proceeding as well as the settlement reached. The order of imposing the fine is final. The proceedings against Kemna were discontinued under the application of the leniency programme.

In conclusion, tender procedures are currently in the focus of the German FCO as this already marks the second decision within a year. In December 2023, fines totaling EUR 4.8 million were imposed on 14 construction companies and 12 individuals due to bid rigging in tender procedures. Given that collusive tendering is subject not only to fines under antitrust law, but also to criminal charges, the consequences for both companies and individuals involved could be significant.