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.
- Bid rigging conduct relates to 19 contracts worth over £150 million
- Met Police Training College, Bow Street Magistrates Court, Selfridges (London) and Oxford University among those affected
- 3 company directors disqualified over illegal construction cartel
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.
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.
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 anti-competitive 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.
Notes to editors
- The 19 contracts affected by the cartel activity were at the following sites: Bishop Centre; MPS Training and Operations Centre, Hendon; Southbank, London; Bow Street, London on 2 separate occasions; Station Hill, Reading; Lots Road Power Station, London; Duke Street, London; Lombard House, Redhill; 18 Blackfriars Road, London; Underground car park, High Wycombe; 33 Grosvenor Place, London; Wellington House, London; Ilona Rose House, London; 44 Lincoln’s Inn Field, London; 57 Whitehall Old War Office, London; 135 Bishopsgate, London; Civic Centre Scheme, Coventry; Tinbergen Building, Oxford.
- The 5 firms found to have been involved in compensation arrangements as well as cover pricing are: Brown and Mason; Cantillon; McGee; Scudder and Erith.
- The Decision in this case was addressed to the entities listed below on 23 March 2023. In some cases it was addressed to entities who are either the economic successor or parent companies of those directly involved in the conduct: Brown and Mason Group Ltd, Cantillon Ltd, Cantillon Holdings Ltd, Clifford Devlin Ltd, DSM Demolition Ltd, DSM SFG Group Holdings Ltd, Nobel Midco Ltd, Nobel Topco Ltd, Erith Contractors Ltd, Erith Holdings Ltd, John F Hunt Ltd, John F Hunt Group Ltd, Keltbray Ltd, Keltbray Holdings Ltd, McGee Group (Holdings) Ltd, MFCOIL Ltd, T. E. Scudder Ltd, P.J. Carey Plant Hire (Oval) Ltd, Carey Group Ltd and Squibb Group Ltd.
- Brown and Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee and Scudder were handed reduced fines as settling parties which admitted their involvement in cartel activity. A party under investigation by the CMA may enter into a settlement agreement if it is prepared to admit that it has breached competition law and is willing to pay a penalty and agree to a streamlined administrative procedure for the remainder of the investigation. In return, the CMA imposes a reduced fine on the business where settlement would achieve clear efficiencies, resulting in the earlier adoption of any infringement decision and resource savings.
- The CMA issued a statement of objections on 23 June 2022 which gave the parties notice of the proposed infringement decision under the competition law prohibitions in the Competition Act 1998 or the TFEU. Contesting parties had the opportunity to make written and oral representations on the matters set out in the statement of objections. Any such representations were considered by the CMA before the final decision was made. The final decision was taken by a 3-member case decision group, which is separate from the case investigation team and was not involved in the decision to issue the statement of objections.
- Scudder and McGee also reported the conduct under the CMA’s leniency policy and therefore benefitted from a discount on their fines. Under the CMA’s leniency policy, a business that has been involved in a cartel may be granted immunity from penalties or a significant reduction in penalty in return for reporting cartel activity and assisting the CMA with its investigation. An undertaking may qualify for immunity or a reduced penalty where it has a genuine intention to confess that it has engaged in cartel conduct and provides information that adds significant value to the CMA’s investigation. Individuals involved in cartel activity may also, in certain defined circumstances, be granted immunity from criminal prosecution for the cartel offence under the Enterprise Act 2002 and from competition disqualification proceedings. The CMA also operates a rewards policy under which it may pay a financial reward of up to £100,000 in return for information which helps it to identify and take action against cartels. More information can be found on the CMA’s leniency policy and informant reward policy.
- Under the Company Directors Disqualification Act, the CMA has the power to apply to the court to disqualify a director from holding company directorships or performing certain roles in relation to a company for a specified period, if a company of which he or she is a director has breached competition law. The Act also allows the CMA to accept a disqualification undertaking from a director instead of bringing proceedings, which has the same legal effect as a disqualification order.
- The register of disqualified directors is published on the Companies House website.
- For more information on anti-trust investigations, visit the CMA’s procedures in Competition Act 1998 cases.
- Anyone who has information about a cartel is encouraged to call the CMA cartels hotline on 020 3738 6888 or email cartelshotline@cma.gov.uk.
- Media enquiries should be directed to the CMA’s press team: press@cma.gov.uk or 020 3738 6460.