Competition and Markets Authority fines construction companies £60m over bids for public and private sector contracts
The Competition and Markets Authority (CMA) has handed out fines totalling nearly £60m after concluding that ten construction firms had colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for public and private sector contracts.
Two of the firms named in the investigation into bid-rigging in demolition and asbestos removal contracts have vowed to appeal the penalty decision.
Each of the ten firms were involved in at least one instance of bid rigging between January 2013 and June 2018, according to the CMA. The fines for each are:
- Brown and Mason (£2,400,000),
- Cantillon (£1,920,000),
- Clifford Devlin (£423,615),
- DSM (£1,400,000),
- Erith (£17,568,800),
- JF Hunt (£5,600,000),
- Keltbray (£16,000,000),
- McGee (£3,766,278),
- Scudder (£8,256,264)
- Squibb (£2,000,000).
Brown and Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee and Scudder were handed reduced fines as settling parties who had admitted their involvement in the cartel activity.
The CMA also secured the disqualification of three directors of the firms involved.
In addition, the investigation found that five firms were involved in arrangements by which the designated 'losers' of the contracts were set to be compensated by the winner. These five were Brown and Mason, Cantillon, McGee, Scudder and Erith.
In one instance, the compensation was higher than £500,000. Some firms produced false invoices to hide this part of the illegal behaviour, the CMA reported.
Not all the firms were involved in colluding in each of the contracts, and not every contractor who submitted a bid for these contracts was involved in the illegal collusion.
At least two firms - Squibb Group and Keltbray - have announced plans to appeal against the CMA's findings and fines.
In a statement announcing its decision, a spokesperson for Squibb Group said the focus of the appeal will mostly concentrate on the background to and determination of the fine.
"In particular, the fact that the fine is disproportionate when seen in the context of the wider investigation and the other infringements discovered as part of the CMA investigation," the spokesperson said.
Squibb Group noted that the appeal process is expected to take in excess of 12 months.
Keltbray, which has been fined £16m, also believes the penalty to be "excessive" compared to the firm's level of involvement.
Commenting on the CMA's decision, Darren James, Chief Executive Officer of Keltbray, said: "We strongly condemn anti-competitive practices and treat all matters that reflect on our compliance with statutory obligations with the utmost gravity. Keltbray has cooperated fully with the CMA throughout this inquiry relating to activities between 2009 and 2017.
"Since that time, much has changed. Keltbray today is a very different organisation with the necessary controls and independent oversight in place, following the early adoption of the Wates Corporate Governance Principles for large, private companies, to ensure these isolated events could never reoccur."
He added: "The reported CMA penalty is based on Keltbray's total group turnover, rather than the actual level of culpability relevant to the wound down subsidiary. Keltbray is a large, highly diversified business, with demolition representing a small proportion of total revenues. Keltbray will be appealing today's penalty decision."
Other firms have accepted the findings and do not plan to appeal.
A spokesperson for McGee said: "McGee acknowledges the publication of the Infringement decision by the CMA for activities that took place under the previous ownership and leadership structure.
"McGee has made a full provision for the fine in previous audited financial statements. There will be no further financial impact on the business, and the matter is now concluded."
All 10 of the firms named in the CMA's investigation have been approached for comment.
Adam Carey
