Keltbray has to pay £18m for its role in demolition’s cover bidding scandal after it its appeal against the penalty issued by the Competition and Markets Authority (CMA) failed on two out of three counts.
The contractor appealed against the £20m financial penalty imposed by the Competitions and Markets Authority (CMA) in 2023, after the regulator’s investigation into tender price collusion at 10 demolition companies between 2013 and 2018.
Keltbray admitted eight infringements of competition law but argued at a tribunal that the CMA’s fine was not appropriate on three grounds:
- It made an error by calculating Keltbray’s revenue over a broadly defined market and should have used relevant tender values instead;
- That it made an error by not distinguishing “highly complex demolition services” from “general demolition services” in its penalty calculation;
- That the £20m figure was excessive.
The £20m was initially reduced by 20 per cent to £16m because of Keltbray’s cooperation with the watchdog but was restored following the launch of its appeal.
It has now been ordered to pay £18m, some £2m more than it would have had to pay if it had not appealed against the fine.
A judgement issued today (Friday 20 December) said the CMA’s assessment of market conditions and calculation of Keltbray’s turnover was “rational and reasonable”.
It also ruled Keltbray did not provide the tribunal with evidence of a clear distinction between its highly complex and general demolition services.
But it did state that the CMA had not adequately explained why it decided the fine should be £20m.
“The decision did not contain an adequate explanation of how financial indicators informed its assessment of the penalty to be charged, and the CMA paid insufficient regard to Keltbray’s low profit margins,” the tribunal said.
It ruled that an £18m penalty was appropriate for Keltbray’s eight infringements.
In a statement, Juliette Enser, executive director of competition enforcement at the Competition and Markets Authority, welcomed the ruling.
“This judgment confirms that serious breaches of competition law, including for cover bidding, will result in significant penalties.
“The CAT [Competition Appeal Tribunal] agreed that, having appealed, Keltbray should lose the discount it received for settling.
“The CAT’s judgment confirms that companies will be held to their agreements – companies which settle cannot take the CMA to court and expect to retain their discounts.”
She added: “Today’s decision should act as a reminder that the CMA will not tolerate unlawful conduct which harms competition and can keep prices up at the expense of businesses and taxpayers.”
In March 2023, 10 demolition contractors, were hit with fines totalling £59.3m for their involvement in bid-rigging.
The Competition and Markets Authority (CMA) ruled in June last year that the firms, which include Keltbray, McGee and Erith, were all colluding on prices through “illegal cartel agreements” when submitting bids for contracts.
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Ian Weinfass