On 17 December 2020, the CMA issued a decision finding that three UK-based suppliers of groundworks products to the UK construction industry had illegally colluded in order to reduce competition and maintain or increase prices, in breach of Chapter 1 of the Competition Act 1998 and Article 101 TFEU.
| what you need to know - key takeaways |
- Two companies were fined over £15 million in total, while a third participant was granted immunity from fines under the CMA's leniency programme, for sharing confidential information and coordinating their commercial activities.
- The construction industry remains an area of focus for the CMA: this is the fourth time in the last two years that the CMA has fined a cartel in this sector.
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According to the CMA's press release, the three suppliers of groundworks products (which are used to protect excavations from collapse during construction projects) shared confidential information on future pricing and commercial strategy, and coordinated their commercial activities to reduce uncertainty, including monitoring each other's prices and challenging quotes considered too low.
Two of the companies, Vp plc and M.G.F. (Trench Construction Systems) Ltd, were found to have participated in the illegal conduct for periods of nearly two years in total, and were fined over £11.2 million and £3.7 million respectively. The third company, Mabey Hire Ltd, was found to have taken part in the conduct for a single period of five months. However, Mabey Hire informed the CMA about the conduct pursuant to the CMA's leniency programme and therefore was not fined.
As noted by Michael Grenfell, Executive Director of Enforcement at the CMA, "this is the fourth time in the last 2 years that the CMA has fined a cartel in the construction sector", with previous fines being imposed on office fit out companies for 'cover bidding'; suppliers of concrete drainage products for infringements including price fixing and market sharing; and firms in the UK roofing materials sector for price collusion, market sharing and a collective boycott. Mr Grenfell stated that it "is essential that the [construction] sector, which is crucial to the success of our country's economy, can benefit from a competitive marketplace to deliver value, innovation and quality". It seems clear that the construction industry will remain an area of focus for the CMA as it moves forward post-Brexit.
With thanks to Danica Barley of Ashurst for her contribution.
