Hong Kong watchdog raids sites over HK$500 million renovation bid-rigging probe

Hong Kong's Competition Commission has conducted raids at 12 premises as part of an operation targeting alleged bid-rigging within the city's building maintenance sector. The investigation, codenamed "Hunter," focuses on 28 renovation projects estimated to be worth around HK$500 million.

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Among the evidence seized during the first round of the operation [in January], the Commission unearthed a series of suspicious text messages exposing the potential existence of another hidden bid-rigging syndicate that attempted to manipulate the outcome of the tender for a building maintenance project.

The raids follow a previous investigation in January, where the watchdog searched the offices of 14 companies involved in building renovation contracts valued at HK$700 million. During that initial probe, suspicious text messages reportedly revealed a syndicate attempting to manipulate tender outcomes for a building maintenance project. Evidence suggests a contractor, through middlemen, allegedly recruited other contractors to submit cover bids.

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The conversation revealed that during the project’s tendering process, a contractor who was not previously under investigation… had allegedly scouted for other contractors through middlemen to submit cover bids.

The commission stated that the suspected contractor provided pricing instructions, referred to as "homework" within the syndicate, to influence tender results. The affected renovation projects are spread across 12 districts, with some tenders yet to be awarded. This crackdown intensifies efforts to combat anti-competitive practices in the sector, particularly after a significant fire at Tai Po's Wang Fuk Court in November.

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However, the response the contractor received was that some contractors had already been recruited by others to participate in bid-rigging for the same project.

Following the fire, the Competition Commission sued a "building maintenance cartel" for allegedly securing contracts worth nearly HK$700 million through illicit means. The watchdog has advocated for criminalizing bid-rigging, characterizing it as a widespread and systematic issue in Hong Kong. Currently, violations of the Competition Ordinance are treated as civil matters, with sanctions imposed by the Competition Tribunal.

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The commission said the contractor suspected of bid-rigging had made pricing instructions to other firms – dubbed “homework” among the syndicate – to manipulate tender results.