Lemminkäinen rejects asphalt cartel allegations, lashes out at Competition Authority

print this

Juhani Sormaala, managing director of the construction company Lemminkäinen, has denied allegations by the Finnish Competition Authority (FCA) of the existence of an asphalt cartel in Finland.
      Responding to charges that Lemminkäinen and a number of other large companies had conspired to fix prices for road projects, Sormaala said that neither witnesses interviewed by the FCA, nor documents on the issue show any evidence of illegal activities.
      He also sharply denied claims of a cartel in roofing felt, and expressed incomprehension at investigations initiated by the Ministry of the Interior concerning leasing agreements for Finnish police and courthouse buildings by a Lemminkäinen subsidiary.
      Two weeks ago the Finnish Competition Authority called for the imposition of fines amounting to nearly EUR 100 million for unfair restriction of trade. The highest single proposed fine, EUR 68 million, was reserved for Lemminkäinen, which the FCA sees as the main initiator of the cartel.
     
Sormaala denounces the FCA for acting "as if the issue were already decided". He notes that the case is now going before the Market Court, whose decision can be appealed to the Supreme Administrative Court. Therefore, the process could go on for several years.
      "Until then, 68 million is just a figure among many others", Sormaala said.
      He also pointed out that with the upcoming court case, the company cannot comment on details of the allegations before it submits its brief to the Market Court, which it must do before the end of May.
      He notes further that during the investigation that has taken about two years, the FCA has changed some of its witnesses, and that some of the witnesses have changed their stories.
      "The reliability of the witnesses and that of the stories they have told can be questioned with good reason. Some have encountered setbacks in their work or business activities."
      Some of the witnesses used by the authority had previously worked as managers at Lemminkäinen, or had sold their business operations to the company.
      Sormaala insists that the FCA has not found a single falsified invoice, and that the investigators have made incorrect interpretations of documents. Also, he says that the investigators have not taken into consideration a number of factors that support the existence of real competition.
      Challenging the assertion that the alleged cartel had managed to push up prices by an extra ten percent, he says that the imagined "real price" would have meant that the asphalt contractors would have operated at a loss.
      Sormaala added that the profitability of asphalt businesses in 1994 - 2002 did not differ from that of comparable sectors during the same period.
     
Lemminkäinen also denounced the tone used by the FCA as insulting and one-sided. The authority’s director-general, Matti Purasjoki, has inveighed against the company’s activity as a "crime against society and taxpayers", and has characterised the whole asphalt sector as a "sunset business". This, in Sormaala’s view, is an insult to his company’s professional pride. 


Previously in HS International Edition:
  Authorities consider criminal investigation into rental agreements of police buildings (2.4.2004)
  Asphalt price fixing case may lead to criminal investigation of intimidation and blackmail (2.4.2004)
  Asphalt firms face record fines over allegations of price fixing (1.4.2004)

Helsingin Sanomat