Company first to appeal liability on cover pricing and win

The Competition Appeal Tribunal has reduced the fines imposed by the OFT on Durkan and Concentra by 64% following a ruling that the companies were not liable for all areas originally alleged by the OFT.

The companies had originally faced fines of £6,720,551 after the OFT found that they had engaged in cover pricing, a sum that has now been reduced to £2,436,000.

Durkan and Concentra were among seven companies that had sought to dispute a number of points, including liability and the ways in which the fines were calculated.

The Tribunal found that the OFT was right to hold Durkan jointly liable because at the time it exercised “decisive influence” over Durkan Purdelek (now called Concentra) but that the OFT had failed to establish that the cover price payment came from the Durkan employee named in the decision. It also ruled that the OFT had made a mistake in calculating the fine on the basis of the last business year prior to the decision.

Alan Davis, a partner at the law firm Pinsent Masons, said: “This was a liability case, the companies were challenging the OFT’s finding of fact and Durkan have won in relation to one of OFT’s points. This is the first case in which the OFT got it wrong.”

The percentage reduction is not as high as that achieved by lawyers acting for Kier and John Sisk, which reduced the amount these companies must pay by up to 94%. The reason for the disparity was that the Durkan case also involved compensatory payments, so the percentage of relevant turnover was maintained at 7%, rather than being reduced, as was the case of Kier, from 5% to 3.5%.

Davis said:”There’s a clear message here that compensatory payments are regarded as a more serious infringment to competition law than cover pricing.”

The other companies contesting liability are:

  • AH Willis and Sons
  • Crest Nicholson
  • GMI Construction
  • ISG Pearce
  • North Midland Construction
  • Quarmby Construction

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