Three directors of demolition firms involved in the collusion have also been banned from running companies.

The CMA found that the companies colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts. Their bids were rigged, deceiving the customer that they were competitive when that was not the case.

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

The companies concerned, and the fines for each, are:

• Brown & Mason – £2,400,000
• Cantillon –  £1,920,000
• Clifford Devlin – £423,615
• DSM –  £1,400,000
• Erith ­–  £17,568,800
• JF Hunt – £5,600,000
• Keltbray – £16,000,000
• McGee –  £3,766,278
• Scudder – £8,256,26  
• Squibb – £2,000,000.

At least one of the companies, Keltbray, has said that it intends to appeal against the size of its fine.

Brown & Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee and Scudder were handed reduced fines as settling parties who had, as announced last year, admitted their involvement in the cartel activity.

The CMA has secured the disqualification of three directors of companies involved in the bid rigging. These are:

• David Darsey (formerly a director of Erith) for a period of 5 years and 10 months
• Michael Cantillon (formerly a director of Cantillon) for 7 years and 6 months
• Paul Cluskey (current director of Cantillon) for 4 years and 6 months.

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 – Brown & Mason, Cantillon, McGee, Scudder and Erith – 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 more than £500,000 in one instance.  Some firms produced false invoices to hide this part of the operation.

The CMA found that the instances of illegal collusion took place over a five-year period and affected 19 contracts for demolition work in London, the Southeast and the Midlands.  Not all 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.

Michael Grenfell, the CMA’s executive director for enforcement, said: “The construction sector is key to our country’s prosperity, so we want to see a competitive marketplace delivering 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 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.”

The CMA investigation, opened in 2019, included unannounced inspections of 15 business premises and interviews with 35 people. It served more than 120 notices requiring the provision of information or documents and scoured emails, mobile phones and financial records relating to the parties.

Keltbray said that it would be appealing the penalty, arguing that its £16m fine was based on group turnover, rather than the turnover of its demolition subsidiary, which has since been wound down. It had been expecting, and made provision in its 2021 accounts for, a £6m fine.

Keltbray chief executive Darren James said: “We strongly condemn anti-competitive practices and treat all matters that reflect on our compliance with statutory obligations with the utmost gravity. Keltbray has cooperated fully with the CMA throughout this inquiry relating to activities between 2009 and 2017.

“Since that time, much has changed. Keltbray today is a very different organisation with the necessary controls and independent oversight in place, following the early adoption of the Wates Corporate Governance Principles for large, private companies, to ensure these isolated events could never reoccur.

“The reported CMA penalty is based on Keltbray’s total group turnover, rather than the actual level of culpability relevant to the wound down subsidiary. Keltbray is a large, highly diversified business, with demolition representing a small proportion of total revenues. Keltbray will be appealing today’s penalty decision.”

The rigged contracts

The 19 contracts corrupted by the cartel activity were at the following sites:

•     Bishop Centre, Maidenhead
•     Met Police Service training and operations centre, Hendon
•     Southbank, London
•     Bow Street, London (on two 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.

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