Faulty foundations in the construction industry?

On 19th July 2017, the Competition and Markets Authority (CMA) launched an investigation into suspected anti-competitive arrangements, including agreements and concerted practices (cartels), in relation to the supply of design, construction and fit-out services in the UK which may infringe Chapter I Prohibition of the Competition Act 1998.

The suspected anti-competitive arrangements and the parties involved have not been identified. Chapter I Prohibition infringements typically include price fixing, collusive tendering (bid rigging), client and market sharing. The Chapter 1 Prohibition will only be infringed if agreements or concerted practices between parties have the object of distorting competition and trade within the UK. Should the CMA conclude that the Chapter I Prohibition has been infringed, the consequences for the infringing parties are likely to be severe. The agreements will be automatically void and unenforceable and Parties would be  fined as much as 10% of their global turnover, their directors may be disqualified for up to 15 years and may even be subject to criminal prosecution. Bad press publicity and the associated costs can have big impacts on businesses and their reputations.

The investigation has been ongoing for over a year and initially focused on inspections, information gathering and issuing information requests to parties of interest. Following a recent review of its position however, the CMA has now announced its decision to extend the investigation to include more parties.

The CMA says that no assumption should be made at this stage that the Competition Act 1998 has been infringed. However, the fact that the investigation is expanding and extending is an interesting development. A further update is expected in December 2018.

If you would like to read more about this CMA investigation please click here.

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For any construction related query please contact chris.hoar@michelmores.com or alan.tate@michelmores.com.