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CONSTRUCTION FIRMS FINED NEARLY £ 60 MILLION FOR BREAKING COMPETITION LAW BY BID RIGGING
The CMA has fined 10 construction firms a total of nearly £ 60 million for illegally colluding to rig bids for demolition and asbestos removal contracts involving both public and private sector projects . The CMA has also secured the disqualification of 3 directors of firms involved in the unlawful conduct .
Following an investigation by the Competition and Markets Authority ( CMA ), 10 UK-based construction firms have been fined £ 59,334,957 for colluding on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts . These bids were rigged , deceiving the customer that they were competitive when that was not the case . Each of the 10 firms was involved in at least one instance of bid rigging between January 2013 and June 2018 . 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 ) and 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 , as announced in June last year , admitted their involvement in the cartel activity .
The CMA has secured the disqualification of 3 directors of companies involved in the unlawful conduct . These are Mr David Darsey ( formerly a director of Erith ) for a period of 5 years and 10 months from 2 February 2023 , Mr Michael Cantillon ( formerly a director of Cantillon ) for 7 years and 6 months and Paul Cluskey ( current director of Cantillon ) for 4 years and 6 months . Each of these directors has benefited from reduced disqualification periods , having voluntarily agreed to the disqualification by way of undertakings to the CMA .
The bids were rigged by one or more of the construction firms agreeing to submit bids that were deliberately priced to lose the tender . This practice , known as ‘ cover bidding ’, can result in customers paying higher prices or receiving lower quality services .
In addition , the CMA found that 5 of the firms , on at least one occasion each , were involved in arrangements by which the designated ‘ losers ’ of the contracts were set to be compensated by the winner . The value of this compensation varied but was higher than £ 500,000 in one instance . Some firms produced false invoices to hide this part of the illegal behaviour .
Michael Grenfell , the CMA ’ s Executive Director for Enforcement , said : “ The construction sector is key to our country ’ s prosperity , so we want to see a competitive marketplace delivering value , innovation , and quality .
“ Today ’ s significant fines show that the CMA continues to crack down on illegal cartel behaviour . It should serve as a clear warning : the CMA will not tolerate unlawful conduct which weakens competition and keeps prices up at the expense of businesses and taxpayers .
“ We have also secured the disqualification of certain company directors involved . Company directors must understand that they have personal responsibility for ensuring that their companies comply with competition law , and that disqualification may follow if they fail to do so .”
The CMA ’ s decision follows a complex and large-scale investigation , opened in 2019 . The CMA conducted unannounced inspections of 15 business premises , interviewed 35 people , served over 120 notices requiring the provision of information or documents and undertook a detailed review of emails , mobile phone communications and financial records relating to the parties .
The CMA ’ s ‘ Cheating or Competing ’ campaign has advice for businesses to help them spot , report and deter illegal anticompetitive practices such as market sharing , fixing prices and bid-rigging . The CMA has also issued a range of guidance to help businesses and directors understand more about how to comply with competition law .
More information on this case is available on the Supply of construction services case page . More information about the director disqualifications , including copies of the disqualification undertakings accepted by the CMA in this case , is available on the Supply of construction services director disqualification case page .
The CMA found that the instances of illegal collusion took place over a five-year period and affected 19 contracts for demolition work in London , the Southeast , and the Midlands . The public and private sector contracts impacted included the development of Bow Street Magistrates Court and Police station , the Metropolitan Police training centre in Hendon , Selfridges ( London ), properties belonging to Oxford and Coventry Universities , shopping centres in Reading and Taplow , a large office block on London ’ s Southbank and other sites in central London . Not all the firms were involved in colluding in each of these contracts , and not every contractor who submitted a bid for these contracts was involved in the illegal collusion . www . constructionviewonline . co . uk