Caught in the crosshairs: CMA has the construction sector in its sights again

United Kingdom

On 28 February, the Competition and Markets Authority (CMA) announced an investigation into suspected anti-competitive behaviour in the provision of supplies to the construction industry. 

This is now one of two Competition Act cases the CMA is investigating concerning supplies to the construction sector.  While the details of this new case are yet to be disclosed, the case opened in April last year relates to the supply of precast concrete drainage products.  Both cases though involve suspected price-fixing and/or market sharing practices; competing suppliers agreeing to fix prices or otherwise not to compete with each other for business. 

Such practices are treated as serious breaches of the Competition Act 1998.  Individuals involved in such practices face criminal prosecution under the separate cartel offence in the Enterprise Act 2002.  Indeed, in the precast concrete drainage case the CMA is conducting a parallel criminal prosecution under the EA02 provisions and one individual has already pleaded guilty to the offence. 

Having in the past themselves been under the competition spotlight in relation to cover pricing and other forms of bid-rigging, building contractors are now the potential victims of anti-competitive practices within their supply chains.  If suppliers to the construction industry are found to have breached competition law and over-charged for the products and services they provide, the buyers of those products and services will have a right of action against them in damages.  Where those costs have been passed through to clients in the contract prices, the clients themselves may be able to bring their own damages actions as indirect purchasers. 

Comment

With two civil investigations and one criminal investigation now in train, competition law will continue to be an important issue for those operating in the construction sector in the UK.  Construction companies need to be alert to signs of anti-competitive practices within their supply chains and those companies supplying to the sector need to ensure they have in place effective compliance measures.