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Competition, Construction, Chemicals, Cartel?

The Competition and Markets Authority (CMA) has recently announced that it has commenced an investigation into a number of suppliers and industry bodies involved in the supply of chemical admixtures and additives for use in concrete, cement, mortars and related construction products in the UK.

The investigation seems to be based solely on the Competition Act Chapter I prohibition and not the Enterprise Act Cartel Offence, so a civil rather than criminal investigation relating to potential agreements or concerted practices which have the object or effect of  preventing, restricting or distorting competition.

The UK investigation is in parallel with investigations in the EU and Turkey. One of the consequences of Brexit is that there are likely to be more such UK investigations in parallel with the EU. It will be interesting to see how well the regulators are able to work in parallel.

The investigation seems to have been initiated with a series of ‘dawn raids’ at companies’ premises.  We understand that Sika was one target of these dawn raids.

Chemicals and Construction are both industry sectors which have seen more of their fair shares of competition law infringement findings over the years. It is interesting to see them combined in this investigation despite the fact that all parties must be assumed to have active competition law compliance programmes given the sector history.

Another curious point is that the CMA announcement doesn’t just refer to suppliers, but also to “industry bodies”. This suggests the possibility that the competition authorities suspect that trade associations may have been a conduit for passing competitively sensitive information between suppliers.

Should the CMA (and other regulators) investigation result in infringement findings this will not only lead to fines and potential consequences for directors, but also open up the companies involved to potential follow-on actions for damages.

However, none of this is likely to happen quickly. The CMA website says that its initial investigation is likely to take until July 2024. Given that timetables often slip, and that there will be coordination required between authorities which often takes time, it’s difficult to see a conclusion to the investigation before 2025. There will then be the possibility of appeals, in relation to the substance of decisions and/or penalties.

At Michelmores we have considerable experience of advising all parties (those being investigated, those who may be victims and even regulators) in relation to these sorts of investigations. If you have any queries please do get in touch with Noel Beale in our competition team or your usual Michelmores contact.