Housebuilders could be fined a combined £2.5bn if found guilty of anti-competitive behaviour

Eight UK housebuilders being investigated over alleged “anti-competitive behaviour” could pay a combined maximum penalty of £2.5bn if they are found guilty.

The Competition and Markets Authority (CMA) announced on Monday it was opening a probe into alleged breaches of competition law by Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry.

The CMA said it was investigating whether the accused housebuilders had been sharing “commercially sensitive information” to “influence the price and build-out of new homes”. It warned that such activity may “weaken competition in the market”. 

How much the eight housebuilders might have to pay

Source: Latest housebuilder published accounts / CMA guidance

Businesses found to have infringed competition law can face fines of up to 10% of their annual worldwide turnover, the CMA has confirmed. 

Based on their latest financial results, Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry have a combined annual global turnover of almost £25bn, meaning they could face maximum penalties of up to £2.5bn if allegations are proven (see table)

Building understands that the CMA rarely imposes the maximum fine, however. In March last year, 10 demolition firms were fined a total of close to £60m for their involvement in bid-rigging following a years-long probe by the CMA. 

In the event that the maximum fine was applied to any housebuilders that were found guilty, the size of the businesses mean penalties could run into hundreds of millions. 

The largest accused firm, Barratt, had an annual turnover of £5.32bn in 2023, meaning if found to have breached the rules, it could pay a maximum fine of £532m.

Taylor Wimpey is the next largest, with £4.2bn turnover meaning it could pay a 10% fine of £420m.

Persimmon (£3.8bn turnover) could pay as much as £381m, Bellway (£3.4bn turnover) could pay £340m, while Berkeley (£2.5bn turnover) could pay as much as £255m.

Vistry Group (£2.7bn turnover) could pay £273m, Redrow (£2.1bn turnover) could be fined up to £213m, while Bloor Homes (£1.4bn turnover) could be fined £137m.

The figures outlined above are from 2022’s financial results and several of the firms under investigation have indicated that this year’s turnover will be smaller. Any fine will likely be calculated on the basis of the most recent financial results, many of which are due to be published over the coming weeks. 

As well as issuing fines of up to 10% of annual global turnover, the CMA has other powers to penalise businesses found to have broken competition law.  

The CMA can impose directions requiring firms to bring any infringing conduct to an end. It can also prosecute “Individuals who engage in cartel activity,” with potential outcomes of a five year prison sentence and/or fine. Company directors can also be disqualified from managing a company for up to 15 years.

>>See also: Eight UK housebuilders face probe over ‘anti-competitive behaviour’

>>See also: Industry reaction to the CMA’s housebuilding report

>>See also: Key takeaways from the CMA’s housebuilding report 

A spokesperson from Bloor Homes, said: “We have been transparent with the CMA throughout the year-long study and are currently reviewing the findings. We will continue to work with them throughout the course of the investigation.”

A Taylor Wimpey spokesperson said: “The CMA’s report identifies proposed changes to the market that we welcome, particularly around the planning process and recognition that housebuilders do not landbank. Taylor Wimpey notes the investigation opened today and we will cooperate fully with the CMA in relation to this.” 

Berkeley, Persimmon, Bellway and Barratt declined to comment. Building has made efforts to contact Redrow and Vistry for comment