Construction firms fined £60m after CMA uncovers illegal cartel

The Competition and Markets Authority (CMA) has fined 10 construction firms almost £60m for illegally colluding to rig bids for construction contracts.

A complex and large-scale investigation by the regulator initiated in 2019 found that the companies colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts.

The CMA found that the bids were rigged and deceived clients into thinking they were competitive when that was not the case.

Some of the organisations affected by the bid-rigging of the 19 contracts include the Met Police Training College, Bow Street Magistrates Court, Selfridges and Oxford University.

Each of the 10 firms was involved in at least one instance of bid rigging between January 2013 and June 2018.

The fines for each company are:

Brown and Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee and Scudder were handed reduced fines after admitting their involvement in the cartel activity. 

The CMA has also secured the disqualification of three directors, including David Darsey (Erith), Michael Cantillon (Cantillon) and Paul Cluskey (Cantillon).

Each of these directors has received reduced disqualification periods, having voluntarily agreed to the disqualification by way of undertakings to the CMA.

The bids were rigged by one or more of the construction firms agreeing 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. 

In addition, the CMA found that five 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. 

The firms involved in these compensation arrangements, as well as cover pricing, were Brown and Mason, Cantillon, McGee, Scudder and Erith. 

Some firms produced false invoices to hide this part of the illegal activity.

Not all the firms were involved in colluding in each of the 19 contracts and not every contractor that submitted a bid for these contracts was involved in the illegal collusion.

Michael Grenfell, the CMA’s executive director for enforcement, said: “Today’s significant fines show that the CMA continues to crack down on illegal cartel behaviour. It should serve as a clear warning: the CMA will not tolerate unlawful conduct which weakens competition and keeps prices up at the expense of businesses and taxpayers.

“We have also secured the disqualification of certain company directors involved. Company directors must understand that they have personal responsibility for ensuring that their companies comply with competition law, and that disqualification may follow if they fail to do so.”