The Court of Odense finds for contracting businesses in construction cartel case

The Court of Odense's judgment of 12 December 2018 – the Prosecution vs H. Skjøde Knudsen A/S and Jorton A/S

By assistant attorney Simon Christensen

Background

The case concerned the contracting businesses H. Skjøde Knudsen A/S (H. Skjøde) and Jorton A/S (Jorton) and their exchange of information about prices bid for works contracts relating to the University of Southern Denmark in Kolding, the University of Southern Denmark in Odense, and the Sanderum School in Odense.

The exchange of the companies' bids for the three works contracts was discovered following an inspection performed by the Danish Competition and Consumer Authority on 6 April 2016. The inspection was performed based on information received by the Authority. Based on the material obtained about the exchange of prices, the Authority found that the bids for the three contracts had been coordinated.

Consequently, following the inspection performed by the Competition and Consumer Authority, the contracting businesses and three executive employees were charged with violation of the Danish Competition Act. 

Exchange of price information

The exchange of information about the prices contained in the bids took place at the request of employees who were in charge of bidding for the contracts on behalf of the two companies.

The works contracts with the University of Southern Denmark

In connection with the bidding for the two works contracts with the University of Southern Denmark in Kolding and in Odense, H. Skjøde asked Jorton to submit the prices they had bid, which Jorton did. In both cases H. Skjøde then decided to increase the price before submitting their bids. 

According to witness statements, H. Skjøde had no intention to win the contracts; they solely submitted bids to draw attention to the company. The purpose of asking for Jorton's prices was to save time, because the preparation of the bids would otherwise have been very time-consuming.

The works contract with the Sanderum School

With regard to the bid for the Sanderum School contract, Jorton asked H. Skjøde to submit a bid for the brickwork. According to the information provided, Jorton was not itself able to perform that part of the contract. The price bid by Jorton for the contract was higher than the price quoted by H. Skjøde to Jorton. The reason was, according to Jorton, that they had added their own profit margin. 

According to Jorton, they did not know that H. Skjøde and its subsidiary were also participating in the bidding process. However, an employee from H. Skjøde was of the opinion that it was a question of "returning a favour" for the two bids that they had previously received from Jorton.

Dismissal of all charges

The Court of Odense found the defendants not guilty on all charges. In its reasoning, the Court emphasized:

• that the prices had been exchanged no more than a couple of hours before expiry of the deadline for submission of bids; and
• that the prices were in any event higher than the price exchanged between the companies.

Consequently, in the opinion of the Court, the Prosecution had not produced sufficient evidence to show that the exchange of price information had had as its object or effect the restriction of competition. The Prosecution had recommended a sentence of imprisonment, which therefore was not allowed. 

The possibility of imprisonment sentences in cartel proceedings was introduced on 1 March 2013, but in Denmark nobody has yet been sentenced to imprisonment for cartel offences. This confirms that the power to impose imprisonment is restricted to severe cartel offences.

The Court's judgment has subsequently been appealed.

Read the Danish Competition and Consumer Authority's mention of the case.