Ten construction firms have been fined a combined £60m by the competition regulator 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 £150m.
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 then return the favour on a different contract. The practice can result in customers, such as the public sector, overpaying or receiving lower-quality services, the CMA said.
Ten companies in the demolition and the asbestos services trade were involved in the cartel, said the CMA, naming Keltbray, Brown and Mason, Cantillon, 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 the bid-rigging, the CMA said.
Michael Grenfell, the CMA’s executive director of 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.”
As well as the fines, three directors of firms involved in the cartel action have also been disqualified, the CMA said.
The regulator began its investigation in 2019, carrying out 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’s leniency programme.