Firms fail in appeal against liability for OFT fines

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Crest Nicholson, ISG Pearce and Quarmby Construction have seen fines for cover pricing cut but appeal against liability failed

Crest Nicholson, ISG Pearce and Quarmby Construction have failed in their attempt to appeal liability on the OFT cover pricing fines but have managed to see their penalties reduced by up to 82%.

The companies are among seven firms that sought to contest the OFT’s view that they had acted anti-competitively when pricing bids for contracts.

The OFT slammed a total of 103 companies with fines of almost £130m in 2009.

Of this Crest Nicholson and ISG Pearce were together fined £5,188,846 while Quarmby Construction and St James Securities Holdings faced penalties of £881,749.

Both groups of companies did succeed in having their penalties reduced by 82% and 76% respectively, in a judgment handed down today by the Competition Appeal Tribunal.

But unlike Durkan, which won its appeal against liability on certain areas and also saw its fine reduced substantially, these two did not succeed in having the question of liability overturned.

A spokesperson for Crest Nicholson said:

“Crest Nicholson is delighted with the finding of the Competition Appeal Tribunal that the fine imposed on it by the Office of Fair Trading in September 2009 in respect of an instance of cover pricing by Pearce Midlands, a former indirect subsidiary of the company, was excessive and disproportionate. The Tribunal reduced Crest’s fine from £4,369,555 to £760,000 for which it is jointly and severally liable with Pearce Midlands and Pearce Midlands’ parent company, both now part of Interior Services Group.

“Crest Nicholson does not condone anticompetitive activity under any circumstances.”

Three companies are still waiting to hear the outcome of their respective appeals against liability, they are AH Willis and Sons, GMI Construction and North Midland Construction.

Six other groups of construction companies saw their fines reduced by between 61 per cent and 77% today after the tribunal found that the OFT had acted in a disproportionate and excessive manner when imposing its penalties.

As in previous appeals, the CAT argued that the OFT should have taken into consideration the prevalent low margins on turnover for the construction sector when calculating the value of penalties and it should also have used the year the financial year preceding the infringement not preceding its decision as the basis.

Fines reduced today:

Francis Construction Limited and Barrett Estate Services: the original penalty of £530,238 was varied to £169,575 (-68%)
GAJ Construction Limited and GAJ (Holdings) Limited: the original penalty of £109,683 was varied to £42,750. (-61%)
Allenbuild Limited and Renew Holdings plc: the original penalty of £3,547,931 was varied to £926,250. (-74%)
Robert Woodhead Limited and Robert Woodhead Holdings Limited: the original penalty of £411,595 was varied to £151,725. (-63%)
J H Hallam (Contracts) Limited and J H Hallam (R&J) Limited: the original penalty of £359,588 was varied to £99,000. (-72%)
Hobson and Porter Limited: the original penalty of £547,507 was varied to £123,750. (-77%)

Contesting liability and penalties imposed:

Quarmby: The original penalty of £881,749 was varied to £213,750. (-76%)
Crest Nicholson/ISG Pearce: The original penalty of £5,188,846 was varied to £950,000 (-82%). Two companies jointly and severally liable but Crest Nicholson’s liability for the penalty reduced by 20%.

The judgments so far:

Kier Group plc and Kier Regional Limited: £17,894,438 reduced to £1,700,000.
Ballast Nedam N.V.: £8,333,116 reduced to £534,375.
Bowmer and Kirkland Limited, B&K Property Services Limited: £7,574,736 reduced to £1,524,000.
Corringway Conclusions plc: £769,592 reduced to £119,344.
Thomas Vale Holdings Limited and Thomas Vale Construction Limited: £1,020,473 reduced to £171,000.
John Sisk & Son Limited and Sicon Limited: £6,191,627 reduced to £356,250.
Durkan and Concentra: £6,720,551 reduced to £2,436,000 not liable for all areas originally alleged by the OFT.
Apollo £2,150,536, reduced to £399,000 (-81.4%)
Galliford Try £8,333,329, reduced to £1,395,000 (-83.3%)
GF Tomlinson £1,269,270, reduced to £579,000 (-54.4%)
G&J Seddon £1,516,646, reduced to £492,000 (-67.6%)
Interclass £464,406, reduced to £324,000 (-30.2%)
Sol Construction £1,835,702, reduced to £744,000 (-59.5%)

Judgments still outstanding where companies are contesting liability: