The UK Competition and Markets Authority (CMA) has published guidance on avoiding collusion in construction.
The post on the Gov.uk website begins with what project managers should be alert to – including bid rigging – an illegal agreement amongst suppliers about who wins a particular bid in order to avoid competing. Other illegal practices include price fixing and the sharing of commercially sensitive information.
It continues by highlighting the consequences of being caught breaking these laws; from an annual 10% fine of a company’s worldwide turnover, all the way up to criminal prosecution.
The CMA’s website states: “Project directors and managers must be alert to the dangers of breaking competition law and need to lead from the top down in promoting a culture of zero tolerance to illegal business practices.
“If businesses are subsequently found to have engaged in any of these types of bid rigging activity, they can expect significant sanctions from the CMA.”
The post follows up on its “Cheating or Competing?” campaign that they started last week which called out the Construction Sector as one which must “get its house in order” following previous action from the CMA that uncovered more than 100 businesses accused of cover bidding.
Currently, they are investigating suspect arrangements in the supply of some services and products in the construction industry.
Furthermore, a recent survey of 400 UK senior representatives from firms and businesses in the sector shed some light on the misunderstanding of legal and appropriate practice. Amongst others, only 6% of firms within the sector were actually familiar with competition law and what it was designed to stop, and nearly a third thought it was okay to attend meetings with competitors to agree prices.
Howard Cartlidge, the CMA’s Senior Director, Cartels said: “The CMA is cracking down on businesses that collude to rip off customers by fixing prices, sharing out markets amongst themselves or rigging bids. Our message to them is that we know cheating when we see it, even if you don’t.
“Pleading ignorance is no defence; it’s up to businesses to know what these unfair practices look like and avoid them.”
A business cartel comes about when rival businesses agree to act together instead of competing against each other, maintain the illusion of competition whilst still benefitting members. A case study provided by the CMA detailed a case in 2019 where 3 concrete companies agreed to fix or coordinate their prices, allocated customers, and exchanged competitively sensitive information. This was with the intent of increasing their prices, whilst maintaining their respective market position without having to compete fairly. Each company was fined £36 million and the directors were disqualified for up to 7 and a half years.
