Lemminkäinen CEO, Timo Kohtamäki, stated that the company has sufficient financing arrangements and liquid funds that will cover the damages.The asphalt cartel regularly overcharged state-commissioned road surfacing work.

LAST WEEK’s ruling by the District Court of Helsinki against a nationwide asphalt cartel has cast the state in a negative light, views Pertti Virtanen, a judge of the Market Court.

On 28 November, the court rejected the state’s claim for compensation on grounds that Tielaitos, a state-run infrastructure contractor, was involved in the market-sharing arrangements with eight road construction companies. The subsequent costs were borne by Tiehallinto, the government agency responsible for purchasing road construction services, and ultimately by the tax-payers.

Virtanen, formerly a professor of business law at the University of Tampere, regards the role of the state in the case as bizarre. “It creates a dishonest image. As an organisation, the state has had to spend substantial funds to have the Competition Authority investigate the cartel – and there are also the costs of the judiciary. On the other hand, the state was involved in the cartel. From a citizen’s viewpoint, this is not particularly pleasing,” Virtanen commented.

The court determined that between 1994 and 2002 the asphalt cartel overcharged municipalities by 15-20 per cent for road surfacing works and duly imposed damages of 37 million euro on the companies involved.

Record damages

Eight municipalities to receive over 10M in damages

• Helsinki was deemed eligible for 9.3 million euro in damages

• Turku: nearly 5 million euro

• Vantaa: some 3.8 million euro

• Tampere: nearly 3 million euro

• Espoo and Oulu: some 1.8 million euro

• Jyväskylä: some 1.5 million euro

• Salo: some 1.3 million euro

• Of the 40 municipalities to demand damages, only the claim of Kemi was dismissed altogether.

Regardless of the record damages, the benefits reaped from the illegal arrangements remain notable, Virtanen reminds. The Finnish Competition and Consumer Authority has estimated that the damage inflicted by the cartel amounts to 400 million euro. In comparison, the penalty of over 80 million euro handed by the Supreme Administrative Court in 2009 and the damages of over 37 million euro imposed by the District Court of Helsinki seem puny.

“[With penalty interests] the total costs rise to 150 million euro. Anyone can calculate that the cartel was a relatively profitable business, with profits from these years amounting to over 200 million euro,” Virtanen gauged.

Hopefully, he added, the painstaking investigation and publicity will prove a deterrent for other companies. “One has to hope that companies in the asphalt business and other sectors will think twice before embarking on illegal cooperation.”

Eight road surfacing companies were involved in a price-fixing and market-sharing arrangement between 1994-2002.Lemminkäinen disappointed but prepared

Roughly 34 million euro of the damages is to be paid by construction company Lemminkäinen, which has estimated that with penalty interests and legal expenses its costs will increase by approximately 20-30 million euro. In a press release issued after the verdict, the company expressed its disappointment with the ruling but revealed that it had “also prepared for this outcome”.

“We have sufficient financing arrangements and liquid funds that will cover these damages,” CEO Timo Kohtamäki said.

In addition to Lemminkäinen, Skanska Asfaltti, NCC Roads, SA-Capital, Rudus Asfaltti, Super Asfaltti and the bankruptcy estate of VLT Trading were deemed liable for damages.



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