CMA fines three construction firms £36 million for cartel conduct

FP McCann Ltd, Stanton Bonna Concrete Ltd ("SBC") and CPM Group Ltd ("CPM") have collectively been fined more than £36 million by the Competition and Markets Authority ("CMA") for participating in an illegal cartel in relation to the supply of concrete drainage products.

The cartel and fines

The three firms were found to have fixed and co-ordinated prices of concrete drainage products, shared the market among themselves by allocating customers, and exchanged commercially sensitive information at regular meetings attended by senior executives of all three firms. In particular, the meetings were used as evidence by the CMA when making its final decision, after it secretly recorded a number of them during the life of the cartel.

At the time of the alleged cartel, which spanned seven years, the three firms were the largest players in the market, holding a combined share of more than 50%. From 2010 onwards, they collectively held more than 90% of the market. The concrete drainage pipes they manufacture are used in large infrastructure projects and are usually supplied to engineering and construction firms, as well as utility providers and local and national government bodies.

Regarding the level of the fine, the CMA said that issuing large fines in this and other sectors are key to cracking down on cartels and deterring others from participating in this sort of behaviour in the future.

SBC and CPM previously admitted their involvement in the cartel, so received reductions to their fines as part of the CMA's leniency and settlement guidelines. In contrast, FP McCann has not accepted responsibility and has said it will be "robustly" appealing the decision.

The criminal investigation and director disqualifications

The CMA also conducted a related criminal cartel investigation into whether individuals had committed an offence under section 188 of the Enterprise Act 2002 (the "criminal cartel offence"). The criminal investigation concluded in June 2017 and in September 2017, the CMA announced that Barry Cooper, the CEO of SBC, had been sentenced to two years' imprisonment suspended for two years, a 6pm-6am curfew for six months and disqualification as a director for seven years, for participating in a price fixing and market sharing cartel in the supply of precast concrete drainage products.

In addition, on 26 April 2019 the CMA announced the disqualification of two former directors of CPM resulting from CPM's involvement in the cartel. The CMA secured legally binding CDUs from the former directors, for periods of seven and a half years and six and a half years. The CMA is entitled to accept such CDUs in place of going to court to seek CDOs, with both measures having the same legal effect.

With thanks to Kate Mullan of Ashurst for her contribution.