Demolition giant Keltbray has lost its appeal against the amount it was fined by the Competition and Markets Authority after a major investigation uncovered an illegal cartel into construction contracts.
The Competition Appeal Tribunal rejected the appeal unanimously today (20 December) following a week-long hearing. Kelbray will now have to pay £18m after losing the discount it would have received for settling.
Keltbray appealed against the competition watchdog’s £16m fine for its involvement in the illegal bid-rigging in the form of cover bidding, arguing that the amount was excessive in the context of its involvement in the cartel.
Cover bidding happens when one or more of the firms involved agree to submit bids that are deliberately priced to lose the tender.
"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," said the tribunal in its judgement. "[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 continued: "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."
A complex investigation
Ten demolition companies were fined a combined £60m in 2023 after the CMA carried out a complex four-year investigation, which found the companies deceived clients into thinking they were competitive when that was not the case.
The firms involved were Brown and Mason, Cantillon, Clifford Devlin, DSM, Erith, JF Hunt, Keltbray, McGee, Scudder, and Squibb.
Keltbray received the second-largest fine after Erith, which was handed a £17.5m penalty.
In May this year, Keltbray and Squibb appealed against the CMA’s fine amounts, although Squibb later withdrew its appeal.
Keltbray’s books for the year ending 31 October 2023 showed the company had made a provision of £6.5m for costs associated with the CMA penalty and related legal fees. The directors calculated the fine would range between £3.9m and £16m, with £6m being "the best estimate provision".
‘Judgment confirms serious breaches of competition law’
Juliette Enser, executive director of competition enforcement at the CMA, said: “We are pleased that the Competition Appeal Tribunal 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 has been approached for comment.
