Construction companies involved in ‘Illegal Cartel Agreements’

The Competition and Markets Authority has provisionally found that ten construction companies have been involved in “illegal cartel agreements” when submitting bids.

Following an investigation launched in 2019, the Competition and Markets Authority (CMA) has provisionally concluded that the firms colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts.

The discovery relates to 19 contracts worth over £150 million, involving demolition work at the Met Police Training College, Selfridges and Oxford University, amongst others:

• Bishop Centre
• MPS Training and Operations Centre, Hendon
• Southbank, London
• Bow Street, London on 2 separate occasions
• Station Hill, Reading
• Lots Road Power Station, London
• Duke Street, London
• Lombard House, Redhill
• 18 Blackfriars Road, London
• Underground car park, High Wycombe
• 33 Grosvenor Place, London
• Wellington House, London
• Ilona Rose House, London
• 44 Lincoln’s Inn Field, London
• 57 Whitehall Old War Office, London
• 135 Bishopsgate, London
• Civic Centre Scheme, Coventry
• Tinbergen Building, Oxford.

Michael Grenfell, the CMA’s Executive Director for Enforcement, said: “The construction sector is hugely important to Britain’s economic wellbeing. Bid-rigging can result in worse deals, which can leave businesses – and sometimes taxpayers – out of pocket.

“This is unacceptable, and the CMA won’t hesitate to come down hard on these activities and impose appropriate fines.”

Cover Bidding

The bids were rigged with the deliberate intention of deceiving the customer that they were competitive. However, one or more construction firms agreed to submit bids that were deliberately priced to lose the tender.

This practice, known as cover bidding, can result in customers paying higher prices or receiving lower quality services.

Provisional Findings from the CMA

The CMA has also provisionally found that seven of the firms, 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 in an attempt to hide this part of the illegal behaviour.

The CMA is keen to point out that not all of the firms were involved in colluding in each of these contracts, and not every contractor who submitted a bid for these contracts was involved in the illegal collusion.

Eight of the firms have admitted their involvement in at least one instance of bid-rigging between January 2013 and June 2018. These are: Brown and Mason, Cantillon, Clifford Devlin, DSM, J F Hunt, Keltbray, McGee, and Scudder.

Two other firms, Erith and Squibb, have not admitted their involvement in any bid-rigging.

Scudder and McGee reported their involvement under the CMA’s leniency policy and will benefit from a discount on any fine, provided they continue to comply with the policy.

Source: This week in FM