Erith queries level of bid-rigging fine

The firm hit with the biggest fine following the Competition and Markets Authority’s investigation into the demolition sector has said the level of its fine is too high.

Erith was hit with a £17.6m penalty last month after being found guilty of bid-rigging and of making so-called compensation payments – which the CMA said involved designated ‘losers’ of contracts being compensated by the winner.

And David Darsey, a former managing director of Erith, who joined the firm in the late 1980s, and is a previous president of the National Federation of Demolition Contractors, was banned for 5 years and 10 months as a result of the probe.

Erith, which was one of two firms to appeal the CMA’s initial findings last summer, has so far not publicly commented on the fine or the CMA investigation.

But in a letter seen by Building and signed by group chairman Steve Darsey, David’s elder brother, Erith says: “We accept the gravity of misconduct and those involved are no longer in our employ. Whilst not disputing the facts our view is that the assessment for any penalties based on turnover of the whole group is unfair and disproportionate and thus we continue discussions with the CMA in an attempt to reach a fair and reasonable settlement.”

The letter was sent just before the CMA made public the level of fines on 23 March against 10 firms caught up in the scandal.

Firms were told months in advance what the likely penalties would be and already Keltbray, fined £16m, and Squibb, hit with a £2m penalty, have said they will appeal the amounts.

In guidance published by the CMA, fines are set “to ensure that the penalty is proportionate and the maximum penalty of 10% of the worldwide turnover of the [firm] is not exceeded”.

Erith, which has been contacted for comment, has not said whether it will appeal the level of its fine but in Darsey’s letter the firm said “robust new systems [introduced] within the business render it impossible for any further infringements of competition law to occur”.

It said the firm has brought in a compliance manager who reports directly to the main board. “He has already overseen the completion of over 400 courses relating to competition law amongst all staff involved in marketing, pre-construction, tender submissions and negotiations,” Darsey added.

In its last set of accounts, Erith Holdings posted an 18% fall in turnover to £176m for the year to September 2021 although pre-tax profit was up one third to £11.3m.