Conflict of interest sees Keltbray team leave £300m HS2 race after JV member bought by rival bidder

A team featuring Keltbray has pulled out of bidding for a job on HS2 after Bouygues formally bought rival French contractor Equans last month, prompting conflict of interest concerns at the UK competition watchdog.

The Equans-owned SPL Powerlines and Keltbray had formed the Rapide joint venture to bid the £300m deal to work on the overhead catenary system on the railway.

The pair were one of four shortlisted last October for the scheme along with Balfour Beatty and the China Railway Electrification Engineering Group – as well as Bouygues-owned Colas Rail.

Over the summer, Bouygues’ move for Equans raised concerns at the Competition and Markets Authority which said that because “the merging businesses are two of a smaller number of bidders in the final stages competing for the [HS2] contract, [then] these two bids coming under the control of the merged business could make the remainder of the tender process less competitive”.

Bouygues formally inked the Equans deal at the start of last month for €6.1bn (£5.3bn) and in a trading update last week said it had been completed “after obtaining the necessary administrative authorisations under competition and foreign investment laws”.

After the deal was signed, Building understands HS2 approached the Rapide JV towards the end of last month asking them to stand down in order to avoid head off conflict of interest worries.

The Rapide JV declined to comment but it is understood the team will be reimbursed bid costs. Keltrbay is also expected to receive compensation, although not from HS2, for missing out on the chance to win a prized contract on the railway.

The team is still expected to bid for subcontract work on the job, which is due to be awarded next spring and covers 589 km of track, as well as 62 viaducts, 293 bridges and 15 tunnels.

In its trading update for the first nine months of the year, Bouygues said income from its construction and services business was up 9% to €22.4bn (£19.5bn). Its overall business, which also includes the TF1 French television network, was up 8% to €29.7bn (£26bn) with operating profit in the period down 10.5% to €1.1bn (£958m).

Earlier this month, Bouygues pipped Mace to win a £250m scheme to build a replacement eye hospital for Moorfields in London called Oriel.