More than eight out of 10 construction firms investigated by the Competition and Markets Authority (CMA) have been handed infringement decisions, according to a new report by law firm CMS.<\/p>\n
The report found that all the investigations resulting in infringement (84 per cent) by the watchdog involved some form of anti-competitive agreement or concerted practice, most commonly around bid-rigging and price-fixing.<\/p>\n
Neil Baylis, a partner at CMS, told Construction News<\/em> that contractors need to be extra cautious when interacting with competitors. He said it was important for all companies to be aware of competition law as it applies to businesses of all sizes.<\/p>\n \u201cWith smaller companies there is often nobody in-house responsible for that [complying with competition law] beyond the directors,\u201d he said.<\/p>\n The report said that the \u201chigh reliance on bidding processes\u201d in the industry coupled with a historically \u201clower awareness\u201d of competition laws, has likely increased the risks of the \u201cmost concerning kinds of collusive behaviour\u201d.<\/p>\n All of the infringement decisions in the sector involved a dawn raid.<\/p>\n \u201cThis is very high in comparison to the proportion carried out in other sectors,\u201d the CMS report said.<\/p>\n \u201cThe severity of the allegations has made inspections the most effective method for the CMA to obtain evidence, without risk of missing \u2018smoking gun\u2019 materials or the destruction of evidence.\u201d<\/p>\n It added that the CMA has reverted to using dawn raids as a \u201cpowerful tool in its armoury\u201d.<\/p>\n The report found that building and construction has the highest proportion of \u201cmid- to high-range fines\u201d from the CMA.<\/p>\n However, more than half the fines handed out were for less than 1 per cent of the firm\u2019s turnover.<\/p>\n Baylis said the higher fines were a result of infringements in the construction sector \u201ctending to be at the more serious end\u201d of competition law.<\/p>\n \u201cIf it\u2019s anything to do with cartel behaviour then you tend to start off with quite a high figure,\u201d he said.<\/p>\n He pointed to the importance of regular training, but acknowledged there are often budget constraints for small firms.<\/p>\n \u201cIn an ideal world you should be doing compliance training once a year, as people\u2019s memories don\u2019t last forever and it\u2019s good to refresh,\u201d he said.<\/p>\n Sharing information is quite a \u201chigh-risk\u201d area in construction, he said. \u201cIt\u2019s a really low bar for infringement and a lot of people don\u2019t realise that.\u201d<\/p>\n The CMS report also noted that there was a \u201cslowdown\u201d in cases opened by the CMA last year. However, Baylis said: \u201cThey [the CMA] are still doing their job, they are still pursuing cases.\u201d<\/p>\n The report added: \u201cThe building and construction industry is still very much on the CMA\u2019s radar.<\/p>\n \u201cNotably the only new investigation launched by the CMA in the last year covered by this report was in the construction sector.\u201d<\/p>\n