Hong Kong competition watchdog launches raids over suspected HK$500 million renovation bid-rigging

Hong Kong’s competition watchdog has launched raids at 12 premises over alleged bid-rigging involving 28 building renovation projects worth around HK$500 million.

The Competition Commission said on Thursday that the raids, conducted on Wednesday under an operation codenamed “Hunter,” included the offices of four unnamed building contractors.

The operation was a follow-up to an investigation in January in which the watchdog searched the offices of 14 companies, including project contractors and consultancy firms, over suspected bid-rigging involving HK$700 million worth of building renovation contracts.

“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 watchdog said in a statement on Thursday.

“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,” it said.

“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,” it added.

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.

The 28 building renovation projects spanned 12 districts across the city, the watchdog said, adding that some of them were yet to be awarded.

Crackdown following Tai Po fire

The Competition Commission launched a large-scale crackdown on bid-rigging in the city’s building maintenance market following the massive fire at Tai Po’s Wang Fuk Court in November last year.

In March, the commission sued a “building maintenance cartel” that had allegedly secured contracts at multiple housing estates worth nearly HK$700 million through bid-rigging and other illicit practices, including at the fire-hit Wang Fuk Court.

During a public inquiry into the fire last month, the watchdog called for the anti-competition behaviour to be criminalised, describing bid-rigging as “widespread” and “systematic” in Hong Kong.

Currently, cases involving breaches of the city’s Competition Ordinance are civil in nature rather than criminal. They heard by the Competition Tribunal, which can impose sanctions such as fines or director disqualifications.

The Wang Fuk Court blaze killed 168 people and displaced thousands, making it one of the worst fire in the city in decades.

The public inquiry heard that non-fire-retardant construction materials were used in a major renovation project at the Tai Po housing estate, contributing to the rapid spread of the blaze, while bid-rigging was suspected during the tender process for the HK$336 million project.

An independent committee investigating the fire is expected to submit a report in October on the cause of the tragedy and the systemic failures that contributed to the high death toll.

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Hans Tse is a reporter at Hong Kong Free Press with an interest in local politics, academia, and media transformation. He was previously a social science researcher, with writing published in the Social Movement Studies and Social Transformation of Chinese Societies journals. He holds an M.Phil in communication from the Chinese University of Hong Kong.

Before joining HKFP, he also worked as a freelance reporter for Initium between 2019 and 2021, where he covered the height - and aftermath - of the 2019 protests, as well as the national security law imposed by Beijing in 2020.