CMA fines ten building firms nearly £60m for ‘cover bidding’
Competition watchdog fines 10 construction companies nearly £60 million for illegal cover bidding on asbestos removal and demolition contracts
- The ten construction companies have been ordered to cough up a combined £59.3 million
- All fined companies found to have participated in ‘cover bidding’
- The CMA said the illegal activities took place from January 2013 to June 2018
Ten construction firms have been fined by the UK competition authority after they were found to be engaged in bid-rigging.
The construction companies have been ordered to pay a combined £59.3 million for illegal cartel pricing in tenders for demolition and asbestos removal work.
Some of the contracts involved the development of Selfridges department store in London, Oxford University, Bow Street Magistrates’ Court and Police Station and the Old War Office building on Whitehall.
Probe: The Competition & Markets Authority has fined 10 construction companies a total of £59.3 million for unlawful price-fixing through cartel agreements
The Competition and Markets Authority said on Thursday the illegal activity took place between January 2013 and June 2018 in London, the Midlands and South East England, and involved public and private sector contracts totaling more than £150 million.
It said the firms have all been involved at least once in cover bidding, in which companies offer a contract with an artificially high price or unreasonable terms with the intent that it will not be accepted.
Such a collusion may give the impression of a competitive bidding process, but it gives a particular supplier an unfair advantage and often results in lower quality services and higher prices for customers.
The CMA has also found that five companies have agreed to reimburse the ‘losers’ of certain contracts, paying out £500,000 on one occasion and forging some invoices to cover up the behaviour.
The sanctions are part of a four-year investigation into anti-competitive practices in the construction industry by the CMA, which can fine companies up to 10 percent of their turnover if they are found to have violated the Competition Act.
The 10 groups fined by the regulator were Squibb; Brown and Mason; John F. Hunt; Cantillon; McGee; shaker; erith; Clifford Devlin; Keltbray and DSM.
Erith and Keltbray received the highest fines at £17.57 million and £16 million respectively, while Clifford Devlin received the smallest fine at £423,000.
All but two of those punished, Squibb and Erith Contractors, had their charges reduced by the CMA for admitting to participating in bid rigging last June.
Erith’s former managing director David Darsey, and Paul Cluskey and Michael Cantillon at Watford-based Cantillon have also been disqualified as directors for terms ranging from four and a half years to seven and a half years.
Michael Grenfell, CMA’s Executive Director of Enforcement, said: ‘The construction industry is key to our country’s prosperity, so we want to see a competitive market that delivers value, innovation and quality.
“Today’s significant fines demonstrate that the CMA continues to crack down on illegal cartel behavior.
“It should serve as a clear warning: The CMA will not tolerate illegal behavior that weakens competition and keeps prices high at the expense of businesses and taxpayers.”