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Commission suspends EU Funds due to “cartels” in Greece’s construction sector

The European Commission temporary suspended all projects funded through the European Regional Developments Funds for the period 2014-2020 claiming there is a suspicion that a construction cartel has been exploiting the funds flowing into Greece.

EC’s official justification for the suspension of funds amounting €13.5 million is the “distortion in awarding contracts for public works.”

The announcement of the Greek government on the “cartels in the construction sector” led the commission on a temporary interruption of EU funds to Greece.

The official justification for the decision to cease the funds amounting to 13.5 million euros, is the “distortion of public works contracts award.”

In a letter to the Greek government, the EC notes that it has decided “to take preventing measures and temporarily suspends payments from the EU Cohesion Funds related to certain infrastructure projects” following an announcement by the Greek Competition Commission on May 17th about the existence of carters in the construction sector. The EC notes further that
this temporary interruption of payments is a “standard procedure” pending confirmation that the EU spending is normal in the context of protection of the EU budget.

Speaking to Athens News Agency, an EC source said that the payments will unfreeze when the Greek government sends a satisfactory answer.

Greece benefits with €20 billion from the EU funds for the period 2014-2020.

The Greek Economy Ministry replied to EC that the relevant “investigation by the  Competition Authority is ongoing and its conclusion is expected in the next period. The investigation involves contracts of large public works during four funding programs periods.”

In its announcement on May 17th, the Greek Competition Commission referred to Greek companies like ELLAKTOR, J&P-AVAX, GEK TERNA, AEGEK, TECHNICAL OLYMPIC and INTRAKAT but also to foreign companies like German HOCHTIEf and SIEMENS. Allegedly “these companies participated, with varying starting points, in bid-rigging for public construction works that spanned from 1989 to 2016.”

Based on the evidence gathered in the investigation, the implicated construction companies coordinated their business conduct on responses to invitations to tender, particularly by:
• Submitting cover bids and/or agreeing amongst themselves who will submit the winning bid;
• Fixing the level of bids (rebated granted)
• Suppressing bids in return for monetary compensation;
• Agreeing to execute sub-contracts before submitting their respective bids; or
• Withdrawing from bidding in return for jointly executing the respective works (more here)

The HCC will convene again on July 21st. The projects refer to notably to road construction, rail transport, metro rail and concession projects.

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