Directors banned as 10 demolition contractors hit with £60m fine after bid-rigging probe

Ten demolition firms have been fined a total of close to £60m for their involvement in bid-rigging following a years-long probe by the Competition and Markets Authority.

The CMA said the fines were “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.” Five firms were also found guilty of making and receiving so-called ‘compensation payments’.

Erith, which along with Squibb contested the initial findings when they were published last summer, has been handed the biggest fine – a £17.6m penalty while Keltbray has been fined £16m. Careys, which owned the now discontinued Scudder at the time of the offences, was hit with an £8.3m fine.

The CMA said eight firms – Brown and Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee and Scudder – were handed reduced fines after admitting their involvement in the cartel activity last year.

The investigation began in 2019 and the 10 were publicly named last June by the cartel-buster as being involved in the scandal with the fines originally due to have been disclosed last autumn but the announcement was delayed until today.

“The bids were rigged by one or more construction firms which agreed to submit bids that were deliberately priced to lose the tender [known as cover pricing],” the CMA added.

>>See also: Cartel probe leaves demolition sector to recover reputation - and count the cost

Three directors were also banned following the probe, the CMA added.

David Darsey, a former director of Erith, has been banned for 5 years and 10 months, Cantillon founder Michael Cantillon has been banned for 7 years and 6 months and Paul Cluskey, a current director of Cantillon, has been banned for 4 years and 6 months.

The CMA added: “Each of these directors has benefited from reduced disqualification periods, having voluntarily agreed to the disqualification by way of undertakings to the CMA.”

As well as being guilty of bid-rigging, five of the 10 – Brown and Mason, Cantillon, McGee, Scudder and Erith – were also found guilty of making and receiving ‘compensation payments’.

The CMA said: “[These five], 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 said its probe, which centred on 19 contracts, involved unannounced inspections of 15 business premises, as well as interviewing 35 people and serving over 120 notices requiring information and documents such as emails, mobile phone records and financial records.

The CMA’s executive director for enforcement Michael Grenfell said: “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.”

In a statement, Keltbray, which said the penalty it had been handed was based on the level of the group’s turnover, announced it would appeal the level of the fine imposed.

It added: “Keltbray did not instigate any infringement activity or benefit financially from the infringements, and therefore believes the intended penalty is excessive when compared to Keltbray’s level of involvement, particularly when compared to the malpractices of other organisations who did benefit financially from their activities.

“Keltbray is therefore disappointed with the level of penalty which the CMA intends to impose on it and will be appealing that decision.”