2 firms slapped with $10m fine for $34m bid-rigging scheme

Two interior construction companies have been fined nearly $10 million in total, following a four-year-long investigation by the Competition and Consumer Commission of Singapore (CCCS).

The companies had colluded over five years to rig 12 tender bids worth more than $34 million.

CCCS said on Dec 20 that Flex Connect, previously known as Facility Link, was fined $4,885,263, while Tarkus Interiors was fined $5,113,918. This is the largest penalty it has issued for bid-rigging.

The rigged bids were for interior construction and finishing works in non-residential properties, including offices, retail spaces and food-and-beverage outlets. Tenders were called from August 2016 to August 2021, and valued between $150,000 and $7.7 million.

The tenders had a total value of around $34,110,000.

Premises affected by the bid-rigging include the Ocean Financial Centre’s Pure Fitness gym and Citibank’s outlet at Changi Business Park. They also include law firm Ernst & Young’s office at 77 Robinson Road, restaurant chain Hans Im Gluck’s outlets at Boat Quay and Vivo City, and computer software company Oracle’s hub at Mapletree Business City.

The two companies are are amongst a pool of 44 firms able to undertake high value contracts, said the competition watchdog.

Under the Building Construction Authority’s registration system, these firms are the only ones allowed to tender for government projects which have an unlimited tender value for interior decoration and finishing works.

No government projects were affected, said CCCS’ assistant director of legal and enforcement Ms Ng Yee Ting, at a media briefing on Dec 20.

In a separate statement, CCCS detailed the way in which both companies would collude to bid for tenders to give each other an edge.

The company who was to win the tender would typically share bid pricing and other information with the other company. The other company would then submit a higher bid to give the designated winner a better chance of winning.

On several occasions, one firm would prepare bid prices and related details for the other company. The other company would then submit this information to the clients.

Seven of the 12 tenders were eventually awarded to Tarkus, while one was won by Flex Connect. Three tenders were not awarded to either firm and the last was cancelled.

CCCS noted that potential customers “were not able to receive truly competitive offers” from the companies, thus potentially overpaying for these tenders.

In May 2024, both companies were issued legal notices, known as Proposed Infringement Decisions, by the competition watchdog. They had six weeks to make individual representations or provide other information in support of their case.

The companies had sought to justify their conduct, claiming for example that they were at risk of being excluded from future tenders if they declined to participate in a tender. But CCCS said this did not justify their collusion.

“(Their) collusive conduct effectively reduced the number of shortlisted tenderers genuinely competing and gave customers the false appearance of competition for their tenders,” it said.

In meting out its punishment, CCCS also considered factors such as each business’ relevant turnover, the nature and seriousness of the infringement and aggravating and mitigating factors.

A leniency discount was given to Flex Connect for coming forward with information after CCCS started investigations.

CCCS’ Ms Ng declined to reveal the quantum of discounts given at the briefing.

The watchdog typically discounts financial penalties for businesses who come forward with information on their cartel practices after investigations begin, if they are found to be eligible for lenient treatment.

If the company is “first through the door” and comes forward with information on infringements, they are eligible for total immunity and for penalties to be waived, said Ms Winnie Ching, group director of legal and enforcement at CCCS.

If they come forward with information at a later point of investigations, they can get leniency discounts of up to 50 per cent.

The initial tip off had come from a member of the public who received information from an anonymous source, sparking the investigations that began in November 2020.

CCCS chief executive Mr Alvin Koh said bid-rigging is a serious infringement of Singapore’s competition laws that harms both businesses and consumers.

“It distorts the competitive bidding process, drives up prices and deprives customers from getting the best value for their tenders...Ultimately, the Singapore consumer and society pays,” said Mr Koh.

“To ensure our markets work well, CCCS will take firm action if we find that tenderers are colluding or participating in any anti-competitive discussions,” he added.

Flex Connect and Tarkus Interiors have up till Feb 20, 2025 to pay the financial penalties, or appeal the decision with the Competition Appeal Board.

Since 2007, CCCS has issued 19 infringement decisions and imposed financial penalties of over $86.3 million for anti-competitive conduct to businesses, ranging from ride-hailing firms to capacitor manufacturers.

The largest financial penalty meted out in a single case so far was in 2018, when 13 fresh chicken suppliers were fined a record $27 million.

The suppliers were issued an infringement decision for operating as a cartel, which involved coordinating the amount and timing of price increases, and agreeing not to compete for each other’s customers.