Demolition contracts were ‘rigged’ through ‘illegal cartel agreements’

10 construction firms illegally conspired to rig bids for demolition and asbestos removal contracts

(Picture: Creative Commons CCO/pxhere.com)

The Competition and Markets Authority (CMA) has concluded that 10 construction firms illegally conspired to rig bids for demolition and asbestos removal contracts, including several in the capital.

Eight of the companies that have now admitted their involvement in at least one instance between January 2013 and June 2018 are Brown and Mason, Cantillon, Clifford Devlin, DSM, J F Hunt, Keltbray, McGee, and Scudder, according to the watchdog.

Following an investigation launched in 2019, the industry watchdog said that firms colluded on prices through “illegal cartel agreements” when submitting bids in competitive tenders for contracts.

According to the CMA the bids were “rigged” with the “deliberate intention of deceiving the customer”.

The authority found the collusion affected 19 contracts for demolition work in London and the Midlands, including contracts for the development of Bow Street’s Magistrates Court and police station, the Metropolitan Police training centre, Selfridges, Oxford University, shopping centres in Reading and Taplow, and offices on the Southbank in the capital.

The bids were rigged by one or more construction firms which agreed to submit tenders  that were deliberately priced to lose. This practice, known as “cover bidding”, results in customers paying higher prices or receiving lower quality services.

The CMA is now proposing to impose fines on the businesses concerned if it reaches a final decision confirming that they have broken the law.

Michael Grenfell, CMA executive director for enforcement, said: “The construction sector is hugely important to Britain’s economic well-being. Bid rigging can result in worse deals, which can leave businesses – and sometimes taxpayers – out of pocket.

“This is unacceptable, and the CMA won’t hesitate to come down hard on these activities and impose appropriate fines.”

In addition, the watchdog provisionally found that seven of the firms involved in the investigation, on at least one occasion each, were involved in arrangements by which the designated “losers” of the contracts were set to be compensated by the winner.

The value of this compensation varied, but was higher than £500,000 in one instance. Some firms produced false invoices in an attempt to hide this part of the illegal behaviour, according to the watchdog.