Friday, 18 March 2022

Press Release – Settlement Procedure: Decision on the ex officio investigation into the market for the supply of impregnated wooden poles (772/2022)  

Subject: Decision on the ex officio investigation carried out into tenders, in particular of PPC-HEDNO, OTE et al., for the procurement of impregnated wooden poles, cross-arms etc., in order to determine whether the conditions for the application of the provisions of Article 1 of L. 3959/2011 on the “Protection of Free Competition”, as in force, and/or Article 101 of the Treaty on the Functioning of the European Union (TFEU) are met,  following the Settlement submissions by the companies i) DRITSA-KAGLI S.A, ii) ELVIEX G.P. PANAGIOTOU S. AND ETETH S.A, iii) KIRIAKOS & NIKOLAOS HARAKIDIS S.A. - WOOD TRADING AND PROCESSING S.A. and iv) KIRIAKOS EMPORIADIS SINGLE-MEMBER PRIVATE COMPANY

The Hellenic Competition Commission (HCC), in plenary, by its unanimous decision adopted in the context of the simplified Settlement Procedure under Article 25a of Law 3959/2011 and according to its Decision No. 772/2022, accepted the settlement submissions by the companies: a) DRITSA-KAGLI S.A, b) ELVIEX G.P. PANAGIOTOU S. AND ETETH S.A, c) KIRIAKOS & NIKOLAOS HARAKIDIS S.A. - WOOD TRADING AND PROCESSING S.A. and d) KIRIAKOS EMPORIADIS SINGLE-MEMBER PRIVATE COMPANY. Following the settlement procedure, the HCC imposed reduced fines totalling EUR 316,798 for the established infringement of article 1 of L. 3959/2011, in accordance with the grounds of the Decision.

The HCC’s Decision was issued in the context of the above simplified procedure, following a relevant interest to settle expressed by all the parties involved and the consequent clear and unequivocal acknowledgement of their participation in the infringements found. According to the same Decision, it is deemed appropriate to apply a downward adjustment to the fine ultimately reduced by 30% due to the economic crisis, while it was further reduced by 15% as the parties involved in the cartel confirmed by an irrevocable, unreserved and clear statement that the relevant Statement of Objections reflects their settlement submissions.

Based on the General Directorate for Competition’s investigation as well as on the acknowledgements by the companies involved in the context of the settlement procedure, it was shown that the above companies participated in a horizontal anti-competitive cartel in the form of an agreement / concerted practice between undertakings within the meaning of art. 1(1) of Law 3959/2011 and 10(1) TFEU. In particular, all the companies involved participated in a bid-rigging scheme concerning six (6) tenders of the HELLENIC ELECTRICITY DISTRIBUTION OPERATOR SA. (HEDNO), defining the framework of their joint action, according to which they preventively reduced the uncertainty implied by independent competitive behavior. The purpose of the above scheme was the artificial shaping of the bids at levels different from those in which they would have been shaped under conditions of effective competition. In particular, they have entered into (a) an agreement / concerted practice aiming at fixing prices and quantities and (b) an exchange of competitors' sensitive commercial information, in particular on prices and quantities.

The relevant product / service market in this case is primarily the procurement of impregnated poles, which includes the market for impregnation of non-impregnated poles (impregnation service) and the marketing of impregnated poles for electricity or telecommunication facilities. The whole Greek territory can primarily be defined as the relevant geographic market, as the undertakings concerned are active or may be active throughout the territory[1]

Regarding the duration of the above cartel, it presents the characteristics of a single and continuous infringement as the individual agreements / concerted practices that were concluded / adopted in the years 2016, 2017 and 2018, had temporal continuity and common characteristics, i.e. characterised by same objectives, methods and stakeholders (same object and subjects).

The provision of article 101 TFEU is applicable in this case as an effect on intra-EU trade can be substantiated. Although the undertakings involved fall within the meaning of small and medium-sized enterprises (SMEs)[2], they are still active throughout Greece and their activities are not, therefore, local or regional in nature, while one of the involved undertakings is engaged in cross-border activity. Moreover, as it appears from the relevant tender notices, the eligibility of participation in the tenders includes natural and legal persons established in a Member State of the European Union, while the tender budgets are particularly high.

According to the grounds of the HCC’s Decision, this is an agreement between the undertakings concerned (bid-rigging) which seeks to restrict competition between them by object. In particular, the undertakings involved violated article 1 of Law 3959/2011 and 101 TFEU by participating in prohibited horizontal bid-rigging cartels through a) fax exchanging – prior to the submission of their financial bids to HEDNO - containing bidding scenarios - quantities for poles, b) fax exchanging prior to the submission of their financial bids - regarding the prices and quantities of the intended bids, c) agreement on the amount of the financial bids and d) sending information of one bidder to another regarding the level of the discount they would offer within a tendering process, before the recipient company of the above information submits its own bid, with parallel adoption of exactly the same discount by the recipient company of the above information.

It should be noted that this is the fourth case where all the companies involved in the infringement came forward for a settlement procedure at a pre-Statement of Objection stage, which increases the procedural efficiency of HCC.

[1] In any case, it is noted that the precise definition of the relevant markets is not a critical element for the legal assessment of the present cartel case.

[2] Notice of the Commission on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice) (OJ C 291/1, 30.08.2014), par. 4, f. 5. See also Commission Notice — Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty (OJ C 101/81, 27.04.2004), par. 50.

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