2 S'pore construction firms fined S$4.6 million for rigging bids to upgrade community clubs

Two construction companies have been fined a total of $4.6M by the Competition and Consumer Commission of Singapore (CCCS) for illegally rigging bids for 3 invitations to tenders called by the People's Association (PA) in 2022.

The companies, Hunan Fengtian Construction Group and Trust-Build Engineering & Construction, were found to have colluded with each other when submitting bid prices despite being competitors, in order to give a designated party, Trust-Build, a better chance of winning a project, CCCS said in a media conference.

The tenders had been called for building construction and major upgrading works at Bukit Batok, Cheng San and Eunos Community Clubs.

According to MOF, open tenders are called for public works in order "to ensure transparency, open and fair competition, and value for money". 

Interested suppliers are then invited to bid according to specific requirements, after which they will be shortlisted based on their capabilities and bidding price.

The rigs first came to light after both companies submitted their three bids from September to October 2022, when PA noticed that their submissions were identical, barring the bidding price.

According to CCCS, Trust-Build had submitted tender bid prices and other submission documents that were prepared by Hunan Fengtian, but their offered bid prices were notably lower than Hunan Fengtian's in order to make Trust-Build's bids look more attractive.

Investigations were carried out by CCCS in July 2023, with raids conducted at the companies' businesses in November 2023.

In the Bukit Batok CC tender, a "Summary of Tender" document sent by Hunan Fengtian's General Manager Xing Hongyun to Trust-Build's Director Wang Jian Jun was found to contain a column with "HNFT" prices, CCCS said.

Trust-Build had submitted the exact price proposed by Hunan Fengtian in that column.

This same observation was made for both the Cheng San CC and Eunos CC tenders.

Investigators also found a series of WhatsApp messages between September and October 2022, showing that both parties had discussed their respective companies' bidding prices prior to submitting them.

CCCS Chief Executive Alvin Koh said that the two companies were industry contacts as they had previously crossed paths at a conference, but kept in touch on developments in the market.

Hunan Fengtian was intending to wind down their business, but Xing wanted to get future business for a separate company, leading to their involvement in trying to help Trust-Build win the tenders.

The final total tender value between all three projects was approximately $56M, according to CCCS documents.

Neither party eventually won any of the tenders.

The Eunos CC tender was aborted due to undisclosed reasons.

CCCS issued a proposed infringement decision on Oct. 25 2024.

Written representations from each party were subsequently considered and an infringement decision was imposed.

Hunan Fengtian was penalised around $350,000, while Trust-Build was penalised almost $4.3M.

No leniency appeals were proceeded with in this case, CCCS reported.

The companies will be given until July 2025 to pay their penalties, and failure to do so could result in a court trial.

Koh stated that the penalties take into account the turnover of the infringing party in both the year when the infringement took place, as well as when the infringement decision was issued.

He emphasised that the absolute figures are not reflective of the exact culpabilities of either party.

In a media conference, Koh called bid-rigging "one of the most egregious forms of anti-competitive conduct" as it violates fundamental principles of competition law and drives up prices.

"Bid-rigging undermines fair competition, distorts the regular operation of market forces, and prevents customers from obtaining genuine and competitive offers", he said.

He added that in this case where public funds are used, taxpayers pay the price of the infringement.

CCCS stated that it offers a leniency programme for businesses who have engaged in or been asked to participate in anti-competitive agreements to offer up information on the agreement.

In doing so, they will be eligible for a full waiver or significant reduction in penalties of up to either 100 per cent or 50 per cent.

CCCS also encourages individuals to report useful information on bid-rigging or other cartel activities should they be aware of them. Under a whistle-blowing scheme, informants can be eligible for rewards of up to $120,000.

Top image by Mothership