- Narrator
This podcast is brought to you by the French Competition Authority, France's independent watchdog in charge of tackling anti-competitive practices. This podcast was originally produced in French. You're listening to an English translation by the French Competition Authority. Voiced by professional actors. All names are unchanged.
- journalist
I’m Isabelle Souquet, a journalist, and you’re listening to Cartels & Co., a series diving into the French Competition Authority’s investigations. Third investigation: the road sign cartel. Episode 2 – Caught Red-Handed at the Restaurant In the last episode, we heard about “The Bible” – a set of strict rules designed to keep the cartel running smoothly and, above all, secret. Everything was decided in advance, from the timing of annual meetings to the geographic division of public contracts. There were even punishments for rule-breakers. And the Bible had another purpose too: to keep the cartel alive, long-term.
- archive
It's a case that may have cost French taxpayers more than a billion euros. An illegal agreement that finally came to light during a raid in the plush surroundings of a Paris restaurant.
- journalist
14 March 2006. Sales reps from the eight biggest road sign manufacturers in France are having lunch at Le Pré-Catelan, a high-end restaurant in the Bois de Boulogne, a large wooded park to the west of Paris.
- S. Martin
Le Pré-Catelan has a beautiful setting, tucked away in the calm of the Bois de Boulogne, surrounded by greenery.
- journalist
That's Stanislas Martin. The General Rapporteur at the French Competition Authority.
- S. Martin
The food’s exceptional; lunch there today would cost about €175. For the members of the cartel, it must have been a lovely afternoon – until, at least, the police showed up.
- journalist
Investigators from the financial crimes unit burst in to the restaurant with a search warrant.
- S. Martin
Picture it – a lavish dining room, ornate plasterwork, sweeping cornices, glittering chandeliers… and then the police storm in. Every scrap of paperwork on the table is seized. It must have been quite the scene.
- journalist
Just a few weeks earlier, in February 2006, a company called Nord Signalisation had filed a complaint, alleging it had been pushed out by its rivals and accusing several of them of collusion. Here’s Bernard Voiret, head of Nord Signalisation, speaking to reporters.
- archive
For years, we’ve been the target of a deliberate attempt by our competitors, France Comté Signaux and especially Giro, to put us out of business.
- journalist
For investigators, the accusations were all the more believable because Nord Signalisation had actually been part of the cartel for three years. At first, the investigation was led by the DGCCRF, France’s consumer watchdog, before the Competition Authority took over. A criminal case was also opened. At one point, investigators even suspected the road equipment trade union might’ve been involved, because it had booked the table at Le Pré-Catelan. But, in the end, the union was cleared. In fact, the cartel members had continued their illegal discussion after the official meeting had ended, without the union knowing. In 2010, the cartel members were fined a total of nearly €53 million, which was later reduced on appeal to about €38.5 million.
- F. Farigoule
Thanks to the French Competition Authority, the truth came out.
- journalist
That’s Frédéric Farigoule, who manages roads for the Orne department. Think of a department as a level of local government in France.
- F. Farigoule
We were shocked. The whole setup was extremely organised, a flat-out cartel. Without the French Competition Authority, we’d still be in the dark about what had been going on, and at what scale, for all those years.
- journalist
For more than 10 years, Orne – like so many other departments – had issued public tenders for road sign contracts and there had never been the slightest suspicion. And yet the same company won every single time.
- F. Farigoule
The cartel covered nine years of road sign contracts in Orne. In a public tender, a local authority – like a department – invites companies to submit bids. The bids stay confidential until the deadline, and then they’re opened all at once. The differences between the bidders were mostly financial. But looking back, there were never any huge price gaps between the companies; it was all quite subtle. From 1999 to 2008, we issued three tenders – and Signature won every single one. The difference between its bid and those of the second- or third-placed companies wasn’t that big, so we never suspected there was any collusion.
- journalist
Fast forward to May 2011. Nine executives from the companies fined by the French Competition Authority went on trial in Nantes. They were given suspended prison sentences of between 3 and 10 months and fined between €20,000 and €50,000. The local authorities that had been overcharged for years also sued for damages.
- S. Martin
The local authorities affected by the cartel have gone to court to recover the extra costs they paid as a result of the fraud.
- journalist
That's Stanislas Martin. The General Rapporteur again.
- S. Martin
There’ve been several court cases. Some have already led to judgments, while others are still making their way through the system. It’s not straightforward. You’ve got to assess the damage caused, which isn’t easy. But the local authorities are fighting to get their money back. And for local taxpayers, that’s good news. Not only have the companies been held to account, and hopefully they won’t break the rules again, but taxpayers are getting, or will soon get, their money back.
- journalist
That’s what happened in Orne. As soon as the fraud was confirmed, the department started legal action to seek compensation. - Frédéric Farigoule explains the extent of the damage.
- F. Farigoule
To assess the damage, we had to go back over every single order from 1999 to 2008. Every order, every quantity. Then we compared the prices paid with what seemed like the fairest price, which we determined based on the public contract that came after the cartel. Right away, we noticed a 40% price difference. That’s huge. Over the nine years of the cartel, we estimated the loss at €2.24 million. To put that into perspective, that’s roughly the cost of building a motorway interchange.
- journalist
Once recovered, the money can be invested by local authorities in other projects.
- Virginie Beaumeunier
What's particularly striking is the direct victim wasn't the consumer, it was the taxpayer.
- journalist
Virginie Beaumeunier was the General Rapporteur at the French Competition Authority at the time. For her, this case was a watershed moment.
- Virginie Beaumeunier
All that extra money that local authorities had to spend on overpriced signs, that was money that could’ve been used for other local needs, like schools and nurseries. So that really matters. - What’s also interesting in this case is that both the French Competition Authority and the DGCCRF made sure that local authorities knew they could seek damages for the harm caused by the cartel’s practices. And as far as I know, quite a few local authorities went to court – and they won.
- journalist
Orne managed to get back a substantial sum , which boosted its general budget.
- F. Farigoule
It’s public money, taxpayers’ money. So of course, we were very happy to get it back and to put it to good use, rather than letting it line the pockets of the companies that had cheated the system.
- journalist
Since the road sign cartel was dismantled, prices have fallen by 10 to 20% across the market. Investigators estimate the extra cost to the French state and local authorities over the 10 years the cartel was operating was between 10 and 30%. According to Irène Luc, Vice-President of the French Competition Authority, criminal law in France could – like in other countries – come down harder on the people behind this kind of organised crime, especially those who rig public tenders.
- I. Luc
I see cartel practices as almost mafia-like. They hurt consumers, who don’t realise they’re being ripped off, and they completely distort competition, which is supposed to give us better products at better prices. Cartels destroy all that. And in the end, it’s the consumer who pays more, without ever knowing it. In France, white-collar crime rarely leads to prison. We’ve never seen a CEO jailed for cartel behaviour – at least, not yet.
- journalist
And that brings us to the end of the road sign cartel. Thanks for listening.
- Narrator
Cartels & Co. is brought to you by the French Competition Authority and produced in English by Peech Studio. To find out more about the French Competition Authority, its work, and other cartels dismantled thanks to its investigations, visit our website. or follow us on social media.
