Ten construction firms fined 60m for rigging contracts

Ten construction firms have been fined a total of 60 m by the competition regulators for illegally colluding to rig bids for lucrative contracts for projects including Bow Street magistrates court and Selfridges department store.

The Competition and Markets Authority CMA found that the companies had acted as a cartel over 19 private and public sector contracts that were worth a total of 150 m.

The contracts were found to have been rigged between 2013 and 2018 using a tactic known as cover bidding, the regulator said.

Cover bidding involves companies conspiring to assist each other in winning contracts by submitting a substandard or overpriced tender that gives the false impression of competition while ensuring that the rival bid will win.

The losing bidder can return the favour on a different contract. The practice can result in customers, such as the public sector, overpaying or receiving less-quality services, according to the CMA.

The CMA said that ten companies in the demolition and asbestos services trade were involved in the cartel, including Keltbray, Brown and Mason, Clifford Devlin, DSM Demolition, Erith Contractors, John F Hunt, McGee, TE Scudder and Squibb.

Five of them were found to have entered into arrangements whereby the company that deliberately lost the bid was compensated by the winner, in one case to the tune of more than 500,000. Some firms produced false invoices to disguise bid-rigging, the CMA said.

Michael Grenfell, the CMA's executive director of enforcement, said that the construction sector is key to our country's prosperity, so we want to see a competitive marketplace that delivers value, innovation and quality. 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 that weakens competition and keeps prices high at the expense of businesses and taxpayers. Three directors of firms that were involved in the cartel action have been disqualified, as well as the fines, according to the CMA.

The regulator began its investigation in 2019 with 15 raids, interviewing 35 people and serving more than 120 notices requiring the provision of information or documents. It also carried out a detailed review of emails, mobile phone communications and financial records relating to the parties involved.

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. McGee s and Scudder's penalties also include a discount under the CMA leniency programme.