Superintendence advocates condemnation of cartel in water pipeline construction

CADE’s General Superintendence Official Opinion published on Monday (September 16th) recommended the condemnation of two construction companies and six individuals for bid rigging. The anticompetitive practice would have occurred in the public bidding for the construction of Lot 03 of the Water Distribution System Mambu/Branco of the Santos Metropolitan Region, in 2007. 

The administrative proceeding no. 012.009885/2009-21 was initiated with the notice submitted by the Basic Sanitation Company of the State of São Paulo (Sabesp, for its acronym in Portuguese), in December of 2009. It was established that the companies Concic Construções Especiais S/A (current Ônix Construções S/A) and Saenge Engenharia de Saneamento e Edificações Ltda., at the time classified as first and second places, respectively, entered in an agreement  in which they agreed to jointly implement the construction, before the closure of the bidding.

Once the contract was signed, Concic withdrew its commercial proposal, in order to favor Saenge, second placed, that came to be initially hired for a value exceeded by more than BRL 13 million compared to Concic’s first place proposal, of almost BRL 60 million. During the construction, Concic filed a lawsuit arguing that Saenge was violating the agreement between them. According to the General Superintendence, t the contract presented to the court characterizes evidence of  cartel formation.

CADE’s General Superintendence found that the companies under investigation used the traditional cartel strategy in bid rigging known as the suppression of proposals to artificially define the winner of the competition, which distorts the competition and damages the public administration and the tax payer. In this way, the Opinion advocates the condemnation of the companies involved. The proceeding now goes to trial by CADE’s Tribunal. 

If condemned, companies and individuals are subject to fines and to other penalties provided by Law. The General Superintendence will also forward a copy of the mentioned Official Opinion to Sabesp, for the adoption of any appropriate action. In 2010,Due to the evidence of irregularities in the bid, Sabesp cancelled, the bidding for the construction of Lot 03 of the Water Distribution System Mambu/Branco.