The competition watchdog has fined two major suppliers to some of Britain’s biggest building firms more than £15million for colluding to reduce competition and keep prices up.
Vp Group and MGF (Trench Construction Systems), which supply excavation groundworks products, have been slapped with fines of £11.2million and £3.8million respectively.
The Competition Markets Authority said the two companies ‘colluded illegally to reduce competition and maintain or increase prices’ for a period totalling almost two years, between 2011 and 2016.
Vp Group and MGF (Trench Construction Systems) supply excavation groundworks products
It said they did so by sharing 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 said.
A third company, Mabey Hire, took part in the collusion for five months but has not been fined as the firm brought the illegal activity to the CMA’s attention and has co-operated with the investigation.
Michael Grenfell, executive director of enforcement at the CMA, said the fine was the proof that the CMA continued to ‘crack down on illegal cartel behaviour and protect consumers’.
It is the CMA’s fourth fine for price fixing in the construction industry in two years.
‘The CMA will not tolerate illegal conduct which weakens competition and keeps prices up at the expense of consumers,’ Grenfell said.
‘It is essential that the sector, which is crucial to the success of our country’s economy, can benefit from a competitive marketplace to deliver value, innovation and quality.’
The fine announced today is the CMA’s fourth fine for price fixing in the construction industry in two years
Vp Group said it ‘fundamentally disagrees’ with the CMA’s verdict and plans to appeal the decision.
Similarly, MGF claims the CMA’s investigation was ‘fundamentally unsound’ and that the watchdog has ‘misunderstood the workings of the market’. It also plans to launch a formal challenge to the CMA’s decision in the Competition Appeal Tribunal.
The two firms supply excavation groundworks products to some of the nation’s largest construction companies for projects such as housing developments, roadworks, railway line works and water pipe upgrades.
Groundworks products are used to protect excavations – such as those made for building foundations or laying pipes – from collapse and are crucial for safe construction work.
It comes after a spate of recent cartel investigations in the building sector, with the CMA fining office fitting companies, concrete pipe firms and rolled roofing lead businesses in the past two years.