French Government Fines National Architects' Group $1.6M Over Fee-Fixing
The French government’s anti-trust agency has fined the national architects’ registration group and four regional councils $1.64 million (€1.5 million) for price-fixing design fees on public works.
In an Oct. 1 announcement, the Autorité de la Concurrence said the fine against Ordre des Architectes is for setting rates, beginning in 2013, for work in the public sector—where market competition determines them—and using alleged strong-arm enforcement tactics.
According to the government, the organization's pre-set rates also included a “fee policy,” which it described as retaliatory measures against architects who did not comply.
The government action follows its investigation in the four regions.
Ordre des Architectes said the fees were developed to offset public-sector "fee dumping," and it will contest the fine.
The group directed regions to refer a non-compliant architect or firm to "disciplinary boards" that could start legal proceedings resulting in a repriimand or temporary suspension, the antitrust agency said, contending that one region created a website "to enable architects whose bids were rejected to report allegedly excessive low fees charged" by winning peers.
The agency said the president of one region defended the enforcement because "a price too low to make sure of winning a contract is an anti-competitive and disloyal practice to colleagues."
Registration group officials also "unlawfully" contacted public entities to "dissuade them from contracting with architects offering fees considered too low," emphasizing technical and financial risks, and often encouraging them to cancel procurements or even projects, said the government's announcement.
According to the anti-trust agency, the pre-set design fees harmed public works contracting "by encouraging architects to fix their fees according to the ranges recommended by the guide without taking into account their actual costs."
The contacts with public owners discouraged some from "choosing architects offering moderate fees and, in some cases, called into question contracts already awarded or under negotiation," resulting in added public cost.
The government claimed in one region, a procurement relaunch for a school complex cost the owner nearly $220,000 (€200,000); another municipality "was repeatedly threatened with litigation" by the regional council if it failed to change its plan.
The practices have largely affected local entities "with limited ability to invest," said the government, adding that the fee-setting is "all the more serious" because the registration board also "benefited from undeniable moral authority" over members and public contracting officials.
The government also fined several unidentified architectural firms and practitioners, as well as an architects' association—participants in the arrangement who allegedly reported those not complying. But the antitrust agency said the 1€ fines to each were so low because the registration group's communication may have caused "confusion among those professionals as to their ethical obligations concerning the fixing of fees."
Noting its intent to appeal the fine in court, Denis Dessus, president of the Ordre des architects, said that "clearly the Autorité de la concurrence does not understand the role of orders, [so] its allegations of organized agreement are meaningless."
Jean-Michel Woulkof, national secretary of the confederation of French architects' unions, noted "the sometimes disastrous consequences of competition on prices, not only for the architects and their partners [in] project management but also for the owners and the public good."
He added that "this judgment throws stigma on the whole profession and on the value of the work of project management, which should in no case be underestimated."
The government said investigation into the fixed rates continues in other regions.