The Brexit debacle still winds its weary way through the news and analysis pages, although nothing substantive seems to change in the original entrenched positions of our politicians. Business life continues but there are anecdotal noises from the industry that contracts aren’t being signed against the drawn out, uncertain background.
Much else in government is reportedly at a virtual standstill but life seems to go on as usual at the Competition and Markets Authority (CMA) which has just announced that it has another investigation under way into alleged anti-competitive behaviour in construction. Details are scant beyond a bland announcement that the investigation concerns suspected infringements of Ch 1 of the Competition Act 1998.
The CMA says the ‘case’ is at an early stage and no assumptions should be made that infringements have in fact taken place. The CMA has not yet reached a view as to whether there is sufficient evidence of an infringement to justify issuing a ‘statement of objections’ to those under investigation, whoever they may be.
There is always a chance that the CMA is simply trying to smoke out whistleblowers or encourage companies that are involved in cartels to come forward and take advantage of the immunities or low fines that can be secured with this tactic. But they continue to find clear evidence of anti competitive behaviour in the industry and are succeeding with prosecutions.
The government recently increased the CMA’s funding by £2.8 million specifically to target cartel activity. After the highly publicised cover bidding prosecutions of 2009 nobody in the industry has any excuse for not realising that construction is a prime target for the CMA; not only is it regarded as riddled with anti-competitive activity, the industry doesn’t seem to be able to hide this sort of activity very well, and the CMA’s encouragement of whistleblowing makes it all the more likely that a cartel member might jump ship at any time to secure itself a more lenient sentence. One recent case was brought to light when a cartel member company was acquired by another company that wanted nothing to do with illegal, collusive behaviour.
Six companies were involved in this most recent example of cover bidding being uncovered, with five of them heavily fined while the sixth was granted immunity for revealing the scandal. Fines over £4 million were levied.
Fines can be levied of 10% of a company’s global turnover and directors can face disqualification for up to 15 years, as well as prison sentences. That worries about the chances of being caught and facing high fines and imprisonment aren’t stopping anti-competitive behaviour is obvious from the fact that prosecutions are still being brought. If all this isn’t enough to stop anti-competitive behaviour in its tracks, then we can only conclude that the potential rewards outweigh the risks; so they must be very high.
Construction obviously remains high on the CMA’s hit list, and that looks unlikely to change soon if announcements like this latest one are any guide. That does not look likely to change whatever the eventual outcome of the UK’s efforts to extricate itself from the European Union.
Nick Barrett
Editor