Construction faces ‘heavy fines’ from CMA probe

The construction industry has been warned to “brace itself” for heavy fines following an ongoing investigation into the sector by the Competition and Markers Authority (CMA).

In March 2019, the CMA announced that it was investigating suspected anti-competitive behaviour in the supply of construction services in the UK. 

George Crofton-Martin, a partner specialising in competition law and the construction sector at firm Furley Page, said: “The CMA has conducted a series of dawn raids in search of evidence of anti-competitive practices and cartel behaviour by a number of construction suppliers. 

“The ramifications of the investigation are likely to be far reaching and the fines that could be imposed have the potential to send shockwaves through the industry.” 

Anti-competitive behaviour is illegal under the Competition Act 1998, which prohibits companies from entering into agreements or concerted practices which are intended to prevent, restrict or distort competition within the UK. 

Aside from the reputational damage and loss of customer trust, businesses found to have acted anti-competitively can be fined up to 10% of their worldwide turnover for the financial year immediately preceding the infringement. They can also face claims for damages from third parties who have fallen victim to anti-competitive practices. 

Meanwhile, individuals found to have engaged in price fixing, market sharing or bid-rigging can themselves face unlimited fines, prison sentences of up to five years and up to 15 years disqualification as a company director. These sanctions are in addition to any fines faced by businesses for falling foul of the Competition Act. 

Crofton-Martin added: “The CMA is really focussed on construction at the moment, and businesses operating in the sector need to make every effort to comply with the law, or face serious financial, reputational and criminal sanctions. Ensuring awareness of the law and the risks through a proactive compliance policy is the first step to protecting a business and its employees.” 

The first stage of the investigation by the CMA is scheduled to complete in September 2019.