Unlawful co-operation between sellers of grain dryers

Last year, one of the largest cartel cases handled by the Competition Authority was concluded. It involved criminal proceedings commenced against undertakings engaged in the sale of grain dryers, as part of which suspicions were filed against AS Tatoli, OÜ Agriland, AS Agribalt, OÜ Werneco, OÜ Baltic Agro Machinery (renamed OÜ BAM2), and OÜ Dotnuva Baltic. The proceedings were based on the suspicion that the undertakings had entered into an anticompetitive agreement on the goods market of grain dryers related to subsidies from the Agricultural Registers and Information Board (ARIB), as part of which they agreed among themselves on the division of the goods market and set the terms of tenders, including prices.

On 20 April 2022, at the request of the Prosecutor's Office, Tartu County Court terminated criminal proceedings against OÜ Agriland, AS Agribalt, OÜ Werneco and OÜ BAM2 under the principle of opportunity and the undertakings involved agreed to pay financial obligations to the state. The obligations imposed ranged between 9,500 and 100,000 euros. In total, the financial obligations imposed on the four undertakings came to 209,500 euros. In terms of private persons, financial obligations were imposed on five persons in the total amount of 4,300 euros. In respect to other suspects, the proceedings are ongoing.

Between 27 December 2018 and 18 January 2019, ARIB held the sixth round of applications for investment aid to improve the performance of agricultural undertakings, under which agricultural undertakings were able to apply for investment aid from ARIB, including for the purchase of grain dryers. To this end, the agricultural undertakings were required to submit at least three comparable price offers to ARIB. According to the suspicions filed, these three offers were often agreed upon by the sellers of grain dryers, meaning they were not competing offers.

The Competition Authority, in co-operation with the Prosecutor’s Office, commenced the proceedings in October 2018 following an analysis of the price offers submitted to ARIB for investment aid to improve the performance of agricultural undertakings. A comparison of the price offers revealed that the allegedly competing offers appeared very similar and were prepared within a very short timeframe (eg within three minutes). After the commencement of proceedings, the next round of applications for investment aid was about to begin, which allowed for surveillance activities to be carried out during the period of preparation of price offers for the round.

Following the conclusion of surveillance activities, the Competition Authority, in co-operation with the police, conducted a search of 12 sites, which is the largest competition-related search carried out in Estonia to date. Based on the evidence gathered as a result of procedural acts, the undertakings engaged in the sale of grain dryers co-operated in the preparation and submission of price offers to receive ARIB subsidies. According to the filed suspicions, the undertakings divided among themselves the goods market for the sale of grain dryers related to the ARIB subsidies and fixed the prices of grain dryers with regard to third persons in such a way as to ensure that the offer of the respective undertaking was declared the best.

The undertakings implicated in the proceedings constitute the majority of the dryer sellers in Estonia, which is why the impact of their agreement on the grain dryer goods market was significant.

In conclusion, the Competition Authority would like to emphasise that competing undertakings must not collude to submit non-competitive tenders to meet the numerical condition of participation in a procurement, even if the contracting authority so desires. Otherwise, the concept of competition is compromised, as it becomes impossible to receive the best offer if all the offers are prearranged.