CMA Updates Leniency Guidance Amid School Roof Bid Rigging Investigation

THE COMPETITION watchdog has updated its leniency guidance amid its ongoing investigation into suspected anti-competitive arrangements in the supply of roofing and other construction services.

The leniency policy is an important part of the Competition and Markets Authority’s (CMA) strategy to deter anti-competitive behaviour by supporting the effective detection of, and enforcement against, cartel activity.

In 2024, the CMA announced it was looking into roofing and construction companies – including building contractors and technical advisors – suspected of agreeing to rig bids to get public funds for improving the condition of school buildings. This investigation is expected to continue until the end of the year.

The watchdog is reminding firms of its leniency policy to encourage those who have been involved in cartel conduct to come forward and cooperate with the CMA in return for immunity from, or a reduction in, financial penalties, and immunity from criminal prosecution and/or protection from director disqualification proceedings.

Leniency Guidance Update

Cartels are considered to be amongst the most serious types of anticompetitive behaviour. They include agreements between competitors to fix prices, share markets and rig bids. This type of conduct deprives people of genuine choice and fair deals. It also reduces incentives for business investment and innovation, which are key drivers of productivity and growth.

The CMA says the existence of the leniency policy can deter cartel activity, in particular by increasing the risk of detection and enforcement.

By sowing distrust amongst cartel members, leniency destabilises cartels, making it less likely that they will endure. In addition, by increasing the risk of detection, leniency reduces the likelihood of cartels being formed in the first place. If firms and individuals continue to engage in cartel activity despite the risks and consequences of doing so, the leniency policy helps the CMA to take efficient and robust enforcement action. Such enforcement action creates a further deterrence effect.

According to the CMA, the key benefits of offering leniency are:

• Detection: Most cartels are conducted in secret. Alongside intelligence leads and other detection tools, the leniency policy helps the CMA to uncover cartels that might otherwise go undetected.
• Enforcement: By encouraging firms and individuals to provide direct ‘insider’ evidence and cooperate proactively with CMA investigations, the leniency policy helps the CMA to take efficient and robust enforcement action against cartel conduct.
• Termination: A condition of leniency is that the applicant must refrain from further participation in cartel activity (even if the CMA does not launch a formal investigation).
• Redress: By facilitating the detection of previously undetected cartels and improving the CMA’s ability to take effective enforcement action, the leniency policy increases the CMA’s ability to reach and publish infringement decisions in relation to cartel activity. Such decisions can be used as the basis of compensation claims for victims of the cartel.

All of these benefits together ensure that the CMA’s leniency policy can increase compliance with competition law, thereby building trust in the UK economy. More effective compliance with competition law increases competition, leading to lower prices, as well as more innovation, choice, quality, security of supply, productivity, investment, and economic dynamism.

Although an offer of immunity or other lenient treatment to those who have infringed the law is not undertaken lightly, the CMA says it is justified by the contribution it makes to tackling and deterring anti-competitive behaviour in the public.

>> Read more about bid rigging in the news