FIEC calls for end to unfair competition

By Helen Wright17 June 2011

FIEC president Luisa Todini

FIEC president Luisa Todini

The European Construction Industry Federation (FIEC) and the European International Contractors (EIC) group have called for measures to level the playing field for contractors facing competition from state-owned enterprises.

Speaking during the FIEC General Assembly in Sofia, Bulgaria, FIEC president Luisa Todini called for an end to unfair competition, citing the example of Chinese contractor China Overseas Engineering Group (COVEC), which won a road building contract in Poland with a tender that was more than -50% lower than the government's budget for the project.

"Examples, such as the Chinese contractor COVEC in the case of the A2 motorway in Poland clearly demonstrate the negative effects of such practice, both for the competitors, the contracting authority and finally the general public who lose out the most," Ms Todini said.

Poland cancelled COVEC's A2 contract on 13 June after the company allegedly ran into financial difficulties and halted construction work in May, stopping payment to subcontractors and prompting protests. It will take up to two weeks for the cancellation to come into force, and the future of the A2 road building project is unclear.

"Disaster"

"The EU and national politicians must ensure that another disaster like this does not happen again. I hope it has been shown once and for all that the race to the bottom on price does not deliver the best deal for taxpayers and will not lead to the kind of construction industry, fit for the future, that we want to have in Europe," Ms Todini said.

FIEC and EIC have appealed for an amendment to EU public procurement legislation to ensure an effective level playing field for all potential EU and third-country tenders, avoiding, in particular, unfair forms of competition between private and state owned companies.

The industry bodies have also proposed introducing incentive measures and trade defence instruments at EU level if international negotiations on creating a level market do not achieve progress.

Finally, FIEC and EIC have proposed making bid prices that include state aid illegal in the EU by introducing mandatory rules on abnormally low tenders.

An international problem

Meanwhile, EIC president Michel Démarre said the problem of unfair competition was not isolated to contracts in Europe.

"European international contractors are unable to compete with state-owned and state-aided construction firms on world markets, such as Africa, because they cannot possibly match the financing possibilities of such state-run bodies.

"Furthermore, the government procurement markets of some countries are practically closed for our enterprises, whereas the EU Internal Market is effectively wide open, even for unfair competition," Mr Démarre said.

A more detailed report on the FIEC Congress includes annual figures for the European construction industry.

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