Inside a CMA probe…

Bugged hotel rooms provide collusion evidence.

The Competition and Markets Authority (CMA) has used the launch of its new “Cheating or Competing” campaign to reveal what takes behind closed doors when cartels meet to collude on pricing.

CMA has also lifted the lid and highlighted the secret conversations that take place inside illegal cartels.

An investigation into a pre-cast concrete drainage cartel that resulted in £36 million in fines in 2019, revealed that the businesses concerned held regular secret meetings (four of which were secretly recorded by the CMA), away from business premises, in hotel meeting rooms.

The businesses discussed and agreed certain price lists, which were then used by sales teams as a basis for negotiating with customers. They also agreed that they would not compete for each other’s customers on certain fixed price contracts. One of the individuals at a cartel meeting said:

“…I’m quite happy if we agree jobs, because you know, it is pointless cutting the bloody price, we should be sticking out, as we’ve always said, get a better price…”

And another said:

“…just set the term deals up, set the … market rates up and the merchants rates up … and the likelihood is you’re going to get the same market share…”

The insight comes as the CMA continues to probe the demolition sector. Offices of several demolition firms have been raided and DemolitionNews understands that investigations are ongoing.

According to new research conducted on behalf of the CMA, only six percent of firms in the construction sector were familiar with competition law and that general understanding of the illegality of these business practices is low.

29 percent of those surveyed thought it was OK to attend meetings with competitors to agree prices. A further 32 percent thought agreeing not to supply each other’s customers was legal, and a quarter (25 percent) saw no problem with discussing bids and agreeing who would get which tenders.