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Groundworks cartel firms fined £15m

17 December 2020

Two firms that supply groundworks products to construction firms, Vp and M.G.F. (Trench Construction Systems) Ltd have been fined a total of £15m after the competition watchdog found them guilty of colluding illegally to reduce competition.

Vp has been fined £11.2m, while M.G.F. received a £3.7m penalty.

An investigation by the Competition and Markets Authority (CMA) found that the firms shared confidential information on future pricing and commercial strategy. They also coordinated their commercial activities to reduce uncertainty, including monitoring each other’s prices and challenging quotes they deemed too low.

The CMA found that collusion between the two firms lasted for periods totalling nearly two years, and a third groundworks company, Mabey Hire Ltd, took part for a single period of five months. Mabey has not been fined as it brought the illegal activity to the CMA’s attention and fully cooperated with the investigation, under the CMA’s Leniency Programme.

Michael Grenfell, executive director of enforcement at the CMA, said: “Today’s announcement shows that the CMA continues to crack down on illegal cartel behaviour and protect consumers. The CMA will not tolerate illegal conduct which weakens competition and keeps prices up at the expense of consumers.”

Highlighting the fact that the CMA’s investigation focused on its Groundforce Shorco business, Vp said in a statement: “The turnover of the business concerned represented 9% of the Vp plc group turnover for the year ended 31 March 2020. No other Vp businesses are included in this investigation.

“The CMA has imposed a penalty of £11.2m on Vp. The group’s accounts to 30 September 2020, announced on Monday 7th December 2020, included a provision of £15.4m in respect of this matter.

“Vp fundamentally disagrees with the conclusions of the CMA and based on the board’s current view of the information available it is our intention to appeal to the Competition Appeal Tribunal (CAT).

“Notwithstanding, the group’s view of the merits of the CMA’s findings, Vp has always prided itself on conducting its business fairly and ethically.  The board is committed to ensuring that our policies and procedures are adhered to by all Vp employees.”