Keltbray loses demolition fine appeal and sees penalty increased to £18m

Keltbray has been told to pay £18m for its role in the demolition sector’s bid rigging scandal after it lost its appeal against the original £16m fine it was hit with last year.

The firm was handed the £16m penalty by the Competition and Markets Authority (CMA) last March when it and nine others were fined a total of £60m for their involvement in bid rigging with five of the 10 – which did not include Keltbray – also found guilty of making so-called compensation payments.

But Keltbray, which was found guilty of eight bid rigging infringements, immediately said it would be appealing the amount, arguing that it was excessive.

At the time, it said: “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.”

But in a 160 page ruling handed down this afternoon – following a five day hearing in the spring – Keltbray was told that its attempt to get the fine reduced had failed.

Keltbray’s original £16m fine had benefitted from a 20% reduction after Keltbray cooperated with the CMA but this has now gone back up again, to £18m, as a result of today’s ruling.

“Keltbray agreed to pay a maximum penalty of £20m and was aware of how the CMA had calculated it, and with the benefit of legal advice,” the judgement said. “[It] was also aware that the 20% discount was being applied on the basis that there would be no appeal, including as regards penalty.”

It added: “We do not accept Keltbray’s claim that the administration of justice would be damaged if a reduction is not applied in this case. In our view, it is more likely that it would be damaged if we did permit Keltbray to in effect retain the benefit of the discount it had received by applying a reduction of a similar amount to the penalty we have determined is appropriate on this appeal. That would be to allow Keltbray to have its cake and eat it.”

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At the Competition Appeal Tribunal held in London in late April and early May, Keltbray argued that the CMA made an error calculating its revenue – CMA fines are handed out as a percentage of a firm’s turnover – that it had not distinguished “highly complex demolition services” from “general demolition services” in its penalty calculation and that the £20m figure was excessive.

The ruling said the CMA’s assessment of market conditions and calculation of Keltbray’s turnover was “rational and reasonable” and that Keltbray did not provide the tribunal with evidence of a clear distinction between its highly complex and general demolition services.

But it did state the CMA had not adequately explained why it decided the fine should be £20m.

In a statement, Juliette Enser, executive director of Competition Enforcement at the CMA, said: “We are pleased that the Competition Appeal Tribunal [CAT} has increased the penalty Keltbray has to pay from £16m to £18m for their part in illegal bid-rigging in the form of cover bidding. This judgment confirms that serious breaches of competition law, including for cover bidding, will result in significant penalties.

“The CAT agreed that, having appealed, Keltbray should lose the discount it received for settling. The CAT’s judgment confirms that companies will be held to their agreements – companies which settle cannot take the CMA to court and expect to retain their discounts.

“Today’s decision should act as a reminder that the CMA will not tolerate unlawful conduct which harms competition and can keep prices up at the expense of businesses and taxpayers.”

Keltbray’s latest accounts show that it spent £554,000 on legal fees in the year to October 2023 after deciding to contest the level of the CMA’s fine.