Probe began more than three years ago and is understood to centre on demolition sector

The results of a probe into cartel activity among several construction firms could be announced next month, the Competition and Markets Authority (CMA) has said.

An investigation opened in March 2019 into possible breaches of the Competition Act in relation to the supply of construction services.

The CMA has declined to say which part of the industry is under the spotlight but insiders have said the probe centres on the demolition sector and involves around half a dozen firms.


Source: Shutterstock

The CMA began its investigation in March 2019

A CMA spokesperson said the next announcement on the case is expected in June or July.

The news comes as Sean McNabb, a director in the CMA’s cartels team, told Building that the “homogenous nature” of many products in construction, and the small number of companies competing for some contracts, meant the industry was at particular risk of cartel activity.

Since 2015, the authority has issued £67m in fines across five separate construction cartel cases, while 11 of the 25 directors disqualified by the CMA in recent years have come from the sector.

A variety of sectors within construction have fallen foul of competition law over this period, including concrete drainage, groundworks, office fit-out services, galvanised steel tanks and roofing materials.

McNabb said all areas of construction should be alert to the dangers of cartel activity, especially where there are close cross-supplier relationships.

Cartel behaviours include price fixing, market sharing, bid-rigging and cover pricing and illegal information exchange.

“I wouldn’t single out a particular type of cartel activity being the most prevalent,” McNabb said. “But bid-rigging does remain a concern which is why at the CMA we have developed training and advice for public procurers on how to best detect and report it.”

He said such behaviour could be taking large sums of money from the public purse, with bid-rigging estimated to increase prices by at least 20% and over a quarter of construction output coming from the public sector.

“If you consider the sums of money being spent on public procurement every year, then the potential for harm from bid-rigging becomes evident,” he added.