Top politicians and state transportation officials were claiming they were shocked and felt cheated, after Norwegian Broadcasting (NRK) aired a lengthy report on the nightly national news detailing illegal price cooperation between the two largest contractors involved in road construction in Norway. Investigations are underway.
The two large contractors, NCC and Veidekke, have a lot of explaining to do after two of their former managers admitted, with NRK recording their comments, that they’d held secret meetings, set prices and divided the market up between them. Together, NCC and Veidekke control around 70 percent of the market for road construction and repair in Norway.
Odin Kringen, a former district leader for Kolo Veidekke, told NRK Dagsrevyen that he and his counterpart at NCC Roads would often meet at small, quiet cafés in Trøndelag and agree on what prices they’d offer in public bidding rounds conducted by the state highway department. They would typically offer different prices, but both over the amount suggested by state officials. Kringen himself estimated the state was thereby repeatedly overcharged by as much as 12 percent over a 10-year period, and taxpayers cheated for millions of Norwegian kroner.
If other contractors tried to break into the market, Kringen told NRK, both Veidekke and NCC would drop their prices to artificially low levels to drive them out. When the would-be competitors dropped out, NCC and Veidekke allegedly would jack their prices up again.
‘Zero tolerance for price-fixing’
State highway director Terje Moe Gustavsen told NRK he felt cheated and was both disappointed and upset by Kringen’s on-air admissions of collusion at Veidekke, along with those of his supposed rival at NCC. “If this is true, it’s extremely serious,” Moe Gustavsen told NRK. “We want competition and have zero tolerance for price-fixing.”
He said he and his fellow state officials now must wait for the results of an investigation into the collusion charges by the state competition authority (Konkurransetilsynet) and the police.
A senior official at Veidekke, Kai Krüger Henriksen, declined to comment directly on Kringen’s admissions while the investigation is going on. Henriksen told NRK, however, that Veidekke officials themselves went to the competition authority last year after the allegations of price-fixing came up in connection with “a personnel matter” that led to Kringen’s dismissal. Henriksen said Veidekke called for an investigation itself into “claims of illegalities at our operations in Trøndelag.”
Questions immediately rose over whether the alleged price-fixing has gone on in other areas of Norway as well. Highway construction and repair is known as being much more expensive in Norway than in other countries, and less efficient, and charges of collusion over asphalt pricing have come up before, with five firms including Veidekke and NCC reported to police in 2001 as well.
‘Can explain high prices…’
Kringen claims Veidekke executives knew what was going on and he simply carried out orders. “My bosses have commanded me to do this,” he told NRK. “I’m prepared to take my part of the punishment (which can include jail time) but then Veidekke itself must be willing to take its part as well.”
Per Sandberg of the Progress Party, an advocate of better roads and highways in Norway, said the NRK report raised the suggestion of “mafia-like operations” in Norway. “Now we’re getting answers for why we in Norway struggle to get the same amount of kilometers of asphalt in place as other countries do,” Sandberg said. “We get fewer and fewer kilometers of road for the funding we allocate. We struggle all the time with the question of why prices are so high.
“We’ve been told that the reason was economic pressure, a labour shortage, high oil prices and all kinds of other things. But now it may also be entirely different reasons.”