Cartels And The Construction Sector - Levelling Up And Screwing Down

• Published date: 28 September 2021
• Subject Matter: Anti-trust/Competition Law, Real Estate and Construction, Antitrust, EU Competition , Cartels, Monopolies, Construction & Planning
• Law Firm: Gowling WLG
• Author: Ms Bernardine Adkins and Samuel R. Beighton

In recent years, the UK's construction sector has not had a happy track record with respect to competition law enforcement, where the Competition and Markets Authority (the CMA) has fined construction companies a total of '67 million across five cases. Of particular significance is the increased focus on individual responsibility, as these cases also led to the disqualification of 11 directors and two criminal convictions.

Any sense that the CMA will now be easing off after such a run of cases should be dispelled by the CMA's message earlier this year to construction business leaders to "take note to avoid making similar mistakes". As the economy tiptoes out of the lockdown and restrictions are eased, this message serves as a timely reminder to individual business leaders of their exposure in this area; both for their businesses and themselves personally.

If anything, CMA scrutiny of this sector is likely to increase, with enhanced investment in public infrastructure through schemes such as the 'Levelling Up Fund', as local and central government 'builds back better' in a post-COVID-19/Brexit world. As the CMA has pointed out, over a quarter of construction output is from the public sector and central government is the biggest single construction client. In this context, the CMA will be particularly concerned to ensure that competition is working effectively; ensures value for money and is not undermined by illegal collusive conduct. To that end, the CMA has also signalled that it is working with public services procurement officials to enable them to identify and report suspected illegal activity.

Spanning a wide variety of activities, from concrete drainage to roofing materials, this article reviews these recent cases as well as the extent of the exposure of companies and individuals operating in the construction sector.

The 'balanced portfolio' of enforcement

What is striking about the recent enforcement decisions is that they involved small as well as large companies. The CMA has long promoted a policy of a so-called 'balanced portfolio' of cases, notably in the construction sector (i.e. companies of all shapes and sizes) - the basic message being that companies of a small scale or individuals involved with them cannot with impunity act in breach of the competition rules. In the case of serious breaches such as price fixing, bid rigging or market sharing, the defence of "no effect on competition" - namely, it was 'a victimless crime' - simply will not wash.

• Groundworks products: in 2020, the CMA fined two businesses a total of more than '15 million for illegal sharing confidential pricing information, and colluding on prices and strategic activity over a period of six years. Meetings between the parties were held from the individuals' business premises and various emails were exchanged using personal email addresses.
• Roofing materials (rolled lead): in 2020, the CMA fined two rolled lead companies more than '9 million collectively for colluding on prices, market sharing through an arrangement not to target certain customers, and exchanging commercially sensitive information over a period of two years. Each company's fine was increased...