Garbage Truck Cartel: How Public Procurement Tenders Were Allocated

Garbage Truck Cartel: How Public Procurement Tenders Were Allocated

Cartel | Public Procurement | Competition Law

In December 2025, the Gazdasági Versenyhivatal (GVH) concluded its investigation into a cartel affecting the procurement of municipal vehicles (VJ/30/2018). The authority found that several market participants had coordinated their bids for years in tenders relating to waste collection and sewer cleaning vehicles.

This article outlines the background of the case, the coordination mechanism identified by the GVH, and the potential legal implications for contracting authorities.

I. The investigation: dawn raids and cartel allegations

On 9 October 2018, the GVH launched proceedings against several manufacturers and distributors of municipal vehicles. The investigation focused on suspicions that the companies had not acted as independent competitors in public procurement procedures but had instead coordinated their bids and allocated tender participation roles in advance.

As part of the investigation, the GVH carried out unannounced on-site inspections (dawn raids). These are among the authority’s most effective investigative tools, allowing it to seize emails, internal documents and other evidence typically central to proving cartel conduct.

The Competition Council ultimately found that the conduct infringed Section 11 of the Hungarian Competition Act, as well as Article 101(1) of the TFEU. According to the decision, the companies participated in the tenders based on a coordinated strategy rather than competing independently.

Importantly, the significance of such decisions goes beyond the imposition of fines. The factual findings and evidence identified by the authority may also have broader legal implications for other market participants.

As discussed below, the case reveals a structured, multi-year coordination practice extending beyond individual tenders.

II. Market context: EU funding and increased tender activity

The conduct took place in a period marked by a sharp increase in public procurement activity. In 2014–2015, reallocations under the Environment and Energy Operational Programme (KEOP), combined with additional state funding, led to a significant number of tenders in the municipal vehicle sector.

This surge in demand created a market environment in which coordination between suppliers became more likely. According to the GVH, what initially may have appeared as capacity-related coordination evolved into systematic bid coordination and allocation of tender roles.

III. How the cartel operated in practice

The GVH found that the companies engaged in regular and structured coordination, rather than isolated exchanges linked to individual tenders. The aim of these discussions was to determine in advance which company would be in a “winning position” in a given procedure, with the other participants aligning their conduct accordingly.

This allocation of roles extended beyond main contractor positions and included subcontracting and supplier arrangements. Internal “tender overview tables” played a key role in implementing and monitoring these arrangements.

A central feature of the conduct was the use of so-called “cover bids”. While multiple companies formally submitted bids, these were structured so as not to exert real competitive pressure. As a result, competition existed in form but not in substance.

The GVH also identified concrete instances of coordination. Companies informed each other in advance which party would submit a serious bid in a given tender, while others adjusted their offers accordingly. In some cases, companies submitted higher-priced or purely formal bids, or later participated in the project as subcontractors.

The authority ultimately characterised the conduct as a single and continuous infringement, lasting from June 2014 to 31 December 2015, with the companies knowingly participating in the coordinated scheme.

IV. Significant fines and settlement

Following its findings, the GVH imposed competition law fines on several participants. As part of settlement procedures, most participants acknowledged the infringement, resulting in a 30% reduction of the fines. Even after this reduction, the total amount of fines exceeded HUF 1.27 billion.

In addition, one participant was fined HUF 270 million for obstructing the proceedings.

Sanctions were not limited to financial penalties. Several participants were also required to implement or maintain competition law compliance programmes.

V. What this means for contracting authorities

The implications of the GVH’s decision go beyond enforcement. A finding of cartel conduct raises the question whether affected procurements may have been overpriced.

Contracting authorities – in particular municipalities and public service providers – that entered into contracts with cartel participants may, in certain circumstances, be entitled to seek damages.

Hungarian competition law establishes a rebuttable presumption that cartel conduct results in a price effect of at least 10%. This can significantly ease the burden of proof for claimants.

The GVH decision may therefore serve as a starting point for assessing whether prices paid in the relevant tenders deviated from competitive market levels.

Against this background, contracting authorities may wish to review procurements carried out during the period covered by the decision, together with the related contractual arrangements, particularly where the tenders involved companies identified in the case. Assessing such claims typically requires a combination of legal and economic analysis.