Read More
The Competition Commission today took legal action in the Competition Tribunal against six undertakings and 12 individuals in connection with a bid-rigging syndicate in the building maintenance sector, involving 11 housing estates and buildings with a total contract value of around HK$700 million.
ADVERTISEMENT
SCROLL TO CONTINUE WITH CONTENT
Between April 2022 and September 2023, the syndicate participated in the tendering of building maintenance projects for at least 11 housing estates and buildings spanning eight districts across Hong Kong Island, Kowloon, and the New Territories.
The bid-rigging syndicate involved in the case was controlled by Smart Goal Construction Engineering Limited, Lermond Development Group Limited and Dream Building Construction Engineering Limited -- collectively referred to as Dream Building -- and led by mastermind Cheung Kwing-kuen, as well as comprising five contractors and five middlemen.
Cheung scouted for target building maintenance projects across multiple districts in Hong Kong and selected the syndicate’s contractors to bid for the projects.
Some contractors were assigned to be the “main character”-- the syndicate’s designated winner -- or helpers providing cover bids.
The mastermind then handed out “homework,” namely pricing instructions, to contractors either by himself or through the middlemen. Contractors referenced the “homework” when submitting bids to help the “main character” win.
The Commission has reasonable cause to believe that such conduct amounts to serious anti-competitive conduct in the form of bid-rigging, price-fixing, market-sharing, and/or exchanging competitively sensitive information, in contravention of the First Conduct Rule of the Ordinance.
The Commission is applying for relief before the Tribunal, including a declaration that the six undertakings and 11 individuals have contravened the First Conduct Rule, as well as the imposition of pecuniary penalties on them and director disqualification orders against six individuals.
Since certain individuals failed to comply with the Commission’s request to provide relevant information when it exercised its compulsory powers during its investigation, these individuals may have committed a criminal offense under Sections 52 and 54 of the Ordinance, and these cases have been referred to the Police for criminal investigation.
Additionally, the Commission also found that when some of the involved contractors submitted their bids, they had signed the “Non-Collusive Tendering Certificates” (NCTC), which were published earlier by the Commission for procurers to use. By making a false representation in the NCTC, the relevant individuals may be liable for the offense of conspiracy to defraud, which will be further referred to the relevant law enforcement agencies for criminal investigation.
“The Commission has been highly concerned about the issue of bid-rigging in the building maintenance market and has, in recent years, conducted five related large-scale search operations. These operations have been vital in advancing the Commission’s investigation work and enabled us to swiftly crack down on those who have been participating in bid-rigging,” said Rasul Butt, Chief Executive Officer of the Commission.
“Today, we have initiated proceedings against a then newly rising bid-rigging syndicate that has been very active in the past few years. Internal communications of the syndicate obtained during our search operations reveal their ambition to corner a quarter of Hong Kong’s building maintenance market through illicit means—clearly reflecting their high degree of scheming and greed,” he added.
The Commission calls on businesses in all sectors to steer clear of anti-competitive practices, while those already involved in cartel conduct should approach the Commission for leniency or cooperation.
