Construction Firms Fined £60m for Bid Rigging

TEN CONSTRUCTION FIRMS have been fined £60 million for rigging bids for demolition and asbestos removal contracts, including on public sector projects.

The Competition and Markets Authority (CMA) has fined the firms as well as secured the disqualification of three directors involved in the unlawful conduct.

The 10 UK-based construction firms were fined £59,334,957 for colluding on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts.

Bid Rigging

The bids were rigged by 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.

The CMA says that five of the firms, on at least one occasion each, arranged that the designated ‘loser’ of the contract was 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 bids deceived customers 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.

Directors Disqualified

The CMA has secured the disqualification of three directors of companies involved in the unlawful conduct. These are David Darsey (formerly a director of Erith) for a period of 5 years and 10 months from 2 February 2023; 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 in undertakings to the CMA.

The CMA found bid rigging affected 19 contracts for demolition work in London, the Southeast, and the Midlands. 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.

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.

>> Read more about construction cartels in the news