Ten demolition firms named in cartel probe

Grant Prior 2 years ago
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Cartel busters at the Competition and Markets Authority  (CMA) have provisionally found that ten construction firms illegally colluded to rig bids for demolition and asbestos removal contracts.

The bid-rigging investigation relates to 19 contracts worth over £150m.

Following an investigation launched in 2019, the CMA has provisionally concluded that the firms colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts.

These bids were rigged with the deliberate intention of deceiving the customer that they were competitive when that was not the case.

The bids were rigged by one or more construction firms which agreed 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.

The CMA is proposing to impose fines on the businesses concerned if it reaches a final decision confirming that they have broken the law.

In addition, the CMA has provisionally found that seven 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 in an attempt to hide this part of the illegal behaviour.

The CMA has provisionally found that the collusion affected 19 contracts for demolition work in London and the Midlands, including contracts for the development of Bow Street’s Magistrates Court and Police station, the Metropolitan Police training centre, Selfridges, Oxford University, shopping centres in Reading and Taplow, and offices on the Southbank, London.

Not all of 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.

Eight of the firms have admitted their involvement in at least one instance of bid rigging between January 2013 and June 2018: Brown and Mason, Cantillon, Clifford Devlin, DSM, J F Hunt, Keltbray, McGee, and Scudder.

Two other firms, Erith and Squibb, have not admitted their involvement in any bid rigging and it should not be assumed that they have broken the law.

Michael Grenfell, the CMA’s Executive Director for Enforcement, said:  “The construction sector is hugely important to Britain’s economic well-being. Bid rigging can result in worse deals, which can leave businesses – and sometimes taxpayers – out of pocket.

“This is unacceptable, and the CMA won’t hesitate to come down hard on these activities and impose appropriate fines.”

A Keltbray statement said: “Keltbray strongly condemns anti-competitive practices and, having co-operated fully and formally settled its case with the CMA, acknowledges the findings relating to isolated activities of a previous management team in a subsidiary business.

“As the CMA investigation has confirmed, Keltbray Limited did not benefit from the award of any contracts nor received any compensation payments arising from this infringement activity.

“Since 2019 Keltbray has transformed its organisational structure and corporate governance framework and has assured all stakeholders that these historic practices will not occur in the future.”

John F Hunt said: “John F Hunt acknowledges and accepts the findings of the CMA investigation which has provisionally found that John F Hunt was involved in breaches of competition law in relation to a small number of historic and unrelated bids.

“We note the CMA’s acknowledgement that John F Hunt was not involved in any compensation arrangements relating to those bids.  John F Hunt also did not benefit from the award of any of the relevant contracts.

“The Group has fully cooperated with the CMA’s investigation and is fully committed to compliance with competition law. We have strengthened our competition law compliance measures and do not condone any activity which limits or restricts competition in the market.”

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