Comment – Collusion probe creeps closer…

Competition & Markets Authority net closing across construction sector.

I can tell you precisely where I was when I received a tip-off that a number of UK demolition firms had allegedly been raided by anti-collusion investigators. I was at the Messe Munchen exhibition centre in Munich during the Bauma 2019 show, on my way to a press conference hosted by Caterpillar when an industry friend called me to tell me about the rumour he’d heard. The Caterpillar press conference lasted just under an hour. By the time it was over, my phone was buzzing with a number of messages, all supporting that initial rumour, some of them naming the companies supposedly involved. Some suggested that laptops and mobile phones had been seized. Some suggested that the investigation hinged upon a “whistle-blower”, possibly allied to the housebuilding sector.

At the time of writing, I have been unable to confirm the true veracity of that rumour, even though I have since heard it dozens more times. Unfortunately, a company that finds itself under the Competition & Markets Authority microscope is not likely to issue a press release celebrating this accomplishment. Although the tabloid press continually attempts to prove otherwise, “no smoke without fire” is not sufficient journalistic proof of any wrongdoing. And I am not in the business of naming names without all the facts at my disposal.

But what does lend credence to this particular rumour is the ongoing activities of the Competition & Markets Authority (CMA) within other parts of the UK construction industry.

Back in March of this year, news portal The Construction Index reported that the CMA was investigating suspected anti-competitive arrangements in the supply of construction services in Great Britain which may infringe Chapter 1 of the Competition Act 1998, it said.

“This case is at an early stage and no assumption should be made that the CA98 has been infringed,” it stressed at the time. “The CMA has not reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections to any of the parties under investigation.”

At the time, the CMA claimed that it was expecting to present its findings by September. However, that investigation now appears to have gathered pace.

At the beginning of March, five office fit-out contractors agreed to pay fines totalling £7 million after admitting colluding in cover pricing. The five companies are Fourfront, Loop, Coriolis, ThirdWay and Oakley, which are all based in London and the Home Counties.

The companies admitted to breaking competition law at least once during the period of 2006 – 2017, in some cases on multiple occasions, following an investigation by the Competition & Markets Authority (CMA).

The whistle was blown by Jones Lang LaSalle (JLL), which acquired fit-out firms Bluu Solutions Limited and Bluuco Limited in 2015 and discovered what had been going on. JLL was let off a fine under the CMA’s leniency programme.

Today, Construction Index reported that Robb Simms-Davies, a former director of Bluu Solutions Ltd, Bluuco Ltd and Tetris Projects Ltd, has been disqualified as a director for five years. Trevor Hall, a former director of Cube Interior Solutions Ltd, has been disqualified for two years six months, and Oliver James Hammond, a former director of Area Sq. Ltd, has been disqualified for two years.

At the beginning of April, Building magazine reported that the CMA was investigating three major suppliers to the construction industry after provisionally finding that they had “formed a cartel to reduce competition and keep prices up”.

The three firms are Wigan-based MGF (Trench Construction Systems) Ltd (MGF), North Yorkshire-headquartered VP plc and West Yorkshire-based Mabey Hire Ltd (Mabey).
Of course, the rumour that this investigation has now extended to the demolition sector might yet prove to be just that: a rumour. And even if it is more than a rumour, there is currently no evidence that the allegations carry any weight whatsoever.

But with fines running into the millions and the potential disqualification of directors considered a suitable punishment, a successful investigation and prosecution could change the very fabric of the UK demolition industry.

I sincerely hope that this is one of those rare instances of smoke without fire.