Local authorities demand EUR 100 million in damages over asphalt cartel

The Lemminkäinen construction company and its competitors are facing demands in Helsinki District Court for EUR 53 million in damages for operating a price fixing cartel for asphalt.
      With interest, the compensation demands rise to about EUR 100 million. The share of Lemminkäinen is more than EUR 50 million, with interest.
      Plaintiffs in the case are 16 local authorities and the Finnish Road Administration. Helsinki is seeking more than EUR 14 million, and the Finnish Road Administration just over EUR 23 million.
     
The existence of a price-fixing agreement among construction companies concerning asphalt work on roads was observed in different parts of Finland from May 1994 through February 2002. According to the Finnish Competition Authority, the cartel covered the entire country.
      Some of the complaints involve asphalt work in which the Market Court, which rules on issues of competition, did not find any evidence of violations of competition legislation.
      The Market Court ruled in December 2007 that there was no evidence of a nationwide cartel on municipal and private projects.
      The court did determine that the companies had violated competition rules, but only in certain areas. It also significantly reduced the penalties called for by the Finnish Competition Authority.
     
The Competition Authority and the construction companies each appealed the Market Court decision to the Supreme Administrative Court, which is to make its decision on the matter, probably sometime next year.
      A separate process at the district court level will begin after the Supreme Administrative Court gives its decision.
     
The complaint by the Finnish Competition Authority that is currently before the Supreme Administrative Court calls for EUR 97 million in penalties against Lemminkäinen, NCC Roads, Rudus Asfalt, SA-Camital, Skanska Asfalt, and Valtatie, which is currently a part of NCC Roads.
      Lemminkäinen faces the greatest fines, EUR 68 million. The demand by the Competition Authority is the same as the one put forward to the Market Court.
     
The construction companies vehemently deny the existence of any cartel.
      However, Lemminkäinen has not appealed the Market Court decision, which applies to the asphalt work ordered by the Finnish Road Administration in 1999-2000, nor to certain parts of its municipal work.
      If the Supreme Administrative Court decides that the asphalt cartel was nationwide, it is likely that dozens of other local authorities will press demands for damages from the construction companies.
      It is also possible that those local authorities that have not yet raised any complaints will lose their opportunity to do so if they are seen as enterprises, as defined by competition legislation.
      Pirkka-Petri Lebedeff, a lawyer for the Association of Finnish Local and Regional Authorities, says that maintaining streets and roads are defined as duties that local authorities are responsible for. Consequently, local authorities are not necessarily the kinds of enterprises that are referred to in the law.


Previously in HS International Edition:
  Asphalt firms face record fines over allegations of price fixing (1.4.2004)
  Lemminkäinen rejects asphalt cartel allegations, lashes out at Competition Authority (15.4.2004)
  Asphalt price fixing case may lead to criminal investigation of intimidation and blackmail (2.4.2004)

Links:
  Lemminkäinen
  Finnish Competition Authority
  The Market Court