Construction industry in firing line again as CMA imposes fines of circa £60m and secures director disqualifications

03 April 2023

On 23 March 2023, the CMA announced its decision to fine ten construction firms a total of nearly £60m for bid rigging in relation to 19 contracts for demolition and asbestos removal across London, the South East and the Midlands. The anti-competitive conduct involved instances of parties agreeing to “cover bid” over a five year period (i.e. submitting bids that were deliberately priced to lose the tender). In addition, the CMA found that half of the companies had also been involved in conduct whereby the “loser” (i.e. the company submitting the cover bid which did not win the contract) was set to be compensated by the winner in some way.

The fines for each firm range from circa £400,000 up to approximately £17.5m, with eight out of 10 of the firms settling with the CMA and admitting their involvement in the conduct, resulting in reduced fines for those firms. The CMA’s investigation was opened in 2019 and included inspections at 15 business premises, interviews of 35 individuals and over 120 formal notices requiring provision of information or documents.

The CMA also secured disqualification of three directors who agreed to disqualification through the provision of competition disqualification undertakings to the CMA: two from Cantillon – one former director (who was part of the business’ founding family) and one current director, and a former director of Erith. The periods of disqualification ranged from 4 years 6 months to 7 years 6 months, all of which reflected reduced periods in light of their provision of undertakings to the CMA.

This announcement further demonstrates the CMA’s increasing focus on obtaining director disqualifications as part of its cartel investigations. This power was first used by the CMA in 2016, and since then the CMA has secured 28 director disqualifications (including the three disqualifications referred to above).

The case may also raise issues relating to management of investigations when a director admits infringing conduct. Although an Erith director agreed to provide a disqualification undertaking regarding his involvement in the anti-competitive conduct to the CMA, Erith (which received a fine of approximately £17.5m) was not one of the settling parties that admitted its involvement in the conduct. The full decision may shed further light on this when published, but the announcement suggests a difference of approach between a company and its former director.