Three directors of demolition firms involved in the collusion have also been banned from running companies.
The CMA found that the companies colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts. Their 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 companies concerned, and the fines for each, are:
- Brown & Mason 鈥� 拢2,400,000
- Cantillon 鈥� 聽拢1,920,000
- Clifford Devlin 鈥� 拢423,615
- DSM 鈥� 聽拢1,400,000
- Erith 颅鈥� 聽拢17,568,800
- JF Hunt 鈥� 拢5,600,000
- Keltbray 鈥� 拢16,000,000
- McGee 鈥撀� 拢3,766,278
- Scudder 鈥� 拢8,256,26 聽
- Squibb 鈥� 拢2,000,000.
At least one of the companies, Keltbray, has said that it intends to appeal against the size of its fine.
Brown & Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee and Scudder were handed reduced fines as settling parties who had, as announced last year, admitted their involvement in the cartel activity.
The CMA has secured the disqualification of three directors of companies involved in the bid rigging. These are:
- David Darsey (formerly a director of Erith) for a period of 5 years and 10 months
- Michael Cantillon (formerly a director of Cantillon) for 7 years and 6 months
- Paul Cluskey (current director of Cantillon) for 4 years and 6 months.
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 five of the firms 鈥� Brown & Mason, Cantillon, McGee, Scudder and Erith 鈥� were involved in arrangements by which the designated 鈥榣osers鈥� of the contracts were set to be compensated by the winner. The value of this compensation varied but was more than 拢500,000 in one instance.聽 Some firms produced false invoices to hide this part of the operation.
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.聽 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鈥檚 executive director for enforcement, said: 鈥淭he construction sector is key to our country鈥檚 prosperity, so we want to see a competitive marketplace delivering value, innovation, and quality.
鈥淭oday鈥檚 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.
鈥淲e 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.鈥�
The CMA investigation, opened in 2019, included unannounced inspections of 15 business premises and interviews with 35 people. It served more than 120 notices requiring the provision of information or documents and scoured emails, mobile phones and financial records relating to the parties.
Keltbray said that it would be appealing the penalty, arguing that its 拢16m fine was based on group turnover, rather than the turnover of its demolition subsidiary, which has since been wound down. It had been expecting, and made provision in its 2021 accounts for, a 拢6m fine.
Keltbray chief executive Darren James said: 鈥淲e strongly condemn anti-competitive practices and treat all matters that reflect on our compliance with statutory obligations with the utmost gravity. Keltbray has cooperated fully with the CMA throughout this inquiry relating to activities between 2009 and 2017.
鈥淪ince that time, much has changed. Keltbray today is a very different organisation with the necessary controls and independent oversight in place, following the early adoption of the Wates Corporate Governance Principles for large, private companies, to ensure these isolated events could never reoccur.
鈥淭he reported CMA penalty is based on Keltbray鈥檚 total group turnover, rather than the actual level of culpability relevant to the wound down subsidiary. Keltbray is a large, highly diversified business, with demolition representing a small proportion of total revenues. Keltbray will be appealing today鈥檚 penalty decision.鈥�
The rigged contracts
The 19 contracts corrupted by the cartel activity were at the following sites:
- 聽聽聽 Bishop Centre, Maidenhead
- 聽聽聽 Met Police Service training and operations centre, Hendon
- 聽聽聽 Southbank, London
- 聽聽聽 Bow Street, London (on two separate occasions)
- 聽聽聽 Station Hill, Reading
- 聽聽聽 Lots Road Power Station, London
- 聽聽聽 Duke Street, London
- 聽聽聽 Lombard House, Redhill
- 聽聽聽 18 Blackfriars Road, London
- 聽聽聽 Underground car park, High Wycombe
- 聽聽聽 33 Grosvenor Place, London
- 聽聽聽 Wellington House, London
- 聽聽聽 Ilona Rose House, London
- 聽聽聽 44 Lincoln鈥檚 Inn Field, London
- 聽聽聽 57 Whitehall Old War Office, London
- 聽聽聽 135 Bishopsgate, London
- 聽聽聽 Civic Centre Scheme, Coventry
- 聽聽聽 Tinbergen Building, Oxford.
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