3 firms fined $609k for rigging F1 contract bids

Three companies, which rigged their bids to provide electrical services for the Formula 1 Singapore Grand Prix from 2015 to this year, were fined $609,118 yesterday.

The Competition Commission of Singapore (CCS) started investigations in 2015 after it received a tip-off. It found that when the F1 tender for electrical services was called in December 2014, Chemicrete, Cyclect Electrical, HPH and Peak Top submitted separate bids.

Cyclect Electrical's bid, which was about 30 per cent lower than the rest, was selected.

The CCS found that the Cyclect Group had told HPH and Peak Top how much to bid, so that Cyclect Electrical, one of its subsidiaries, could win the tender.

Among the evidence presented yesterday was a WhatsApp conversation. On Dec 10, 2014, an HPH director sent a WhatsApp message to a manager at Chemicrete, also part of the Cyclect Group: "Bro have u check with your md (managing director) on the Grand Prix tender. How he want to work together. Or he want me to submit a bogus price only. The tender quite big and a lot of things to do. Please advise."

Cyclect Group was fined $559,297; HPH, $28,128; and Peak Top, $21,693.

Separately, two of the three parties were fined over another bid-rigging offence.

In March 2015, Gems World Academy called for a quote for barcode tagging services at its campus property. It received three quotes from Chemicrete, HPH and a third firm with no ties to the first two parties and which was not investigated. Chemicrete's quote cost half as much as HPH's, and it won the tender. For this, Cyclect Group was fined $12,000 and HPH was fined $5,000.

The CCS did not disclose how much the contracts were worth.

The largest fine issued by CCS was $7,564,950, against Japanese bearings manufacturer Nachi-Fujikoshi in 2014. The firm colluded with others to fix prices.

Said CCS chief executive Toh Han Li: "Bid-rigging is one of the most harmful types of anti-competitive conduct as it distorts the competitive bidding process, thereby preventing businesses from getting the best value for their tenders."

He added: "Bidders should always be aware that they shouldn't be discussing bids with competitors, and they should educate their employees not to do so, because they could be found liable if their employees are found liable."

Under the Competition Act, business entities cannot collude to prevent, restrict or distort competition.

Cyclect Group managing director Melvin Tan said in a statement that the firm had "never intentionally worked against industry practices".

"We have cooperated to the best of our ability during the investigations. Hence, this decision came as a shock to us. We are currently reviewing the decision with our legal advisers and will be keeping all our options open, including an appeal," he said.

Peak Top declined to comment, while HPH did not respond to The Straits Times' queries.

When ST asked Singapore GP if it would continue working with the Cyclect Group, a spokesman said: "As a policy, Singapore GP is not able to comment on commercial specifics related to the Formula 1 Singapore Grand Prix."

The three parties have till Jan 29 next year to pay the fines if they decide not to appeal against the judgment.

A version of this article appeared in the print edition of The Straits Times on November 29, 2017, with the headline '3 firms fined $609k for rigging FI contract bids'. Print Edition | Subscribe