Three weeks of appeals against the size of the fines issued by the Office of Fair Trading last September for cover pricing began on Monday - and Kier was first up
The 25 construction firms, appearing individually at London’s Competition Appeals Tribunal, also include Galliford Try (fined £8.3m), Bowmer & Kirkland (£7.6m) and John Sisk (£6.2m). Kier claimed its £17.9m penalty, the highest, should be a percentage of profit rather than turnover, while others are expected to argue that the fine should be a percentage of UK turnover rather than worldwide revenue. The ruling on how to calculate the fine will set a precedent for future penalties.
Ros Kellaway, head of competition at law firm Eversheds, said of the calculation method: “The OFT’s approach has previously been endorsed by the Court of Appeal, and the OFT has taken this success as the green light to apply it in all cases. If successful, this appeal could have an impact on other cases, as well as future infringement decisions.
“Following its recent high-profile difficulties [the OFT is under pressure to prove it can still bite], the OFT will be hoping to win the backing of the appeal court on its fining policy.”
Frustration gives way to quiet confidence
Building blog All the action from the first day in court
It’s 3pm and John Dodds slumps in his seat and shakes his head with derision. On the other side of the sunny hearing room a lawyer representing the Office of Fair Trading explains to Mr Justice Barling why Kier’s £17.9m fine was calculated as a percentage of turnover rather than profit. Dodds, who retired as Kier chief executive in February, shakes his head again, then snorts.
Sitting next to Dodds is his wife, Kier finance director Deena Mattar. They listen as the lawyers discuss Kier’s entire profit for 2009 being wiped out by the fine. Another stomach-churning detail is that Kier’s fine would have been £2m less if based on its 2009 rather than 2008 results - figures it had been two weeks away from being able to pull together. Oomph.
When the two-hour hearing concludes, Dodds and Mattar enter a private consultation room with their legal team. After 10 minutes they leave looking confident. The questions asked by Mr Justice Barling and his two panel colleagues certainly hinted that they believe profit should be considered. But neither Dodds nor Mattar will comment when we share a lift with them and Kier’s lawyers, who are asked not to talk to me either.
The car descends into silence. Then Mattar tells me: “Don’t forget, it’s Galliford Try on Friday.” Indeed it is. After that the 25 firms will make written submissions and a decision will be made by Christmas. It’s early days yet but judging by the strength of the arguments and tone of the questioning from the judging panel, Kier and the others might just be in for a happy Yuletide.
Andrew Hankinson is deputy news editor