Precast concrete cartel and the UK competition authority: A hardened approach to enforcement

06 November 2019

On 23 October, the UK competition authority (the CMA) publicised its decision to fine three firms (and certain parent companies) a total of more than £36 million for an infringement of UK and EU competition law.

In addition to these fines, the CMA has pursued a successful criminal prosecution, and has secured director disqualifications, with individuals disqualified from acting as company directors for periods of between 6½ and 7½ years.

The case therefore exemplifies the breadth of the CMA's enforcement powers, and how the CMA will apply these powers, confirming the significant risks that companies and individuals face when competition law is infringed.



Precast concrete products: The CMA's civil investigation

The CMA's civil investigation concerned the conduct of three firms, FP McCann Limited, Stanton Bonna Concrete Limited, and CPM Group Limited (together, the Parties) in relation to the supply of certain precast concrete drainage products in Great Britain.

Precast concrete drainage products are essential for large-scale construction and infrastructure products, including roads, railways, and water management projects.

Following its civil investigation, the CMA found that between July 2006 and March 2013 the Parties infringed UK and EU competition law by:

  • Agreeing to fix or coordinate their prices charged to customers.
  • Allocating customers amongst themselves so as to "share the market".
  • Exchanging competitively sensitive information.[1]

The CMA considered that throughout the infringement period the Parties' combined share of supply was more than 50%, and from 2010 onwards it was more than 90%.[2]

The CMA has also confirmed that it used covert recordings of meetings between the Parties as evidence in the context of its civil investigation,[3] with these covert recordings having been made by the CMA during its criminal investigation (considered below).

Two of the Parties, Stanton Bonna Concrete Limited and CPM Group Limited, have admitted their involved in the infringement, and the fines imposed upon their corporate groups have been reduced to reflect these admissions.

However, FP McCann Limited has indicated that it intends to contest the CMA's findings on appeal.

Harm to customers as a result of the infringement

The CMA's Chief Executive, Andrea Coscelli, confirmed in a press statement that the Parties:

"entered into illegal arrangements where they secretly shared out the market for important building products and agreed to keep prices artificially high. This is totally unacceptable as it cheats customers out of getting a good deal".[4]

Moreover, the Parties' combined share of supply (approaching 100% from 2010), the nature of the infringement (price fixing and customer allocation), and the duration of the infringement (almost seven years) mean that this may be expected to have had a significant impact upon prices.

In this context, direct and indirect customers that have suffered loss or damage as a result of the infringement (including, for example, paying more for the products than they would have done in the absence of the infringement) are able to seek compensation from the Parties for this harm.

Precast concrete products: Earlier criminal conviction and director disqualification

Prior to its civil investigation, in March 2016 the CMA commenced the criminal prosecution of an individual under the criminal "Cartel Offence" for their conduct in relation to the supply of certain precast concrete drainage products in Great Britain.

The CMA did so under the Cartel Offence as it applied prior to 1 April 2014, whereby it was necessary for the prosecution to prove that the individual had acted dishonestly. As we have previously considered, the Cartel Offence was amended with effect from 1 April 2014, so as to remove the requirement for "dishonesty", thereby lowering the bar for successful prosecutions.

Faced with this criminal prosecution, the individual pleaded guilty to the Cartel Offence, and was sentenced in September 2017 to two years' imprisonment (suspended for two years). The individual was also made the subject of a six-month curfew order, and was disqualified from acting as a company director for a period of seven years.[5]

Subsequent director disqualifications

In addition to the criminal prosecution, in April 2019 the CMA accepted legally binding competition disqualification undertakings (CDUs) from two individuals who had been directors of CPM Group Limited.

Under these CDUs, the individuals were disqualified from acting as company directors for periods of 6½ and 7½ years.[6]

As outlined in our earlier update, the CMA can accept CDUs for periods of up to fifteen years, instead of making (or progressing) applications to court for competition disqualification orders. In this context, it is clear that the CMA is actively seeking to use its director disqualification powers when taking enforcement action.

What does this case mean for businesses and individuals?

The case highlights the CMA's commitment to enforcement action, and to ensuring that companies are held liable for infringements, with individuals held personally responsible (either through criminal prosecution, or director disqualification).

Against this backdrop, companies and individuals should:

  • proactively consider the extent of any potential exposure they may face; and
  • take appropriate action and advice at the earliest opportunity to ensure that any risks are effectively managed.

For example, if a company is granted immunity under the CMA's leniency programme, it will receive:

  • immunity from financial penalties;
  • immunity from criminal prosecution for any of its cooperating current or former employees or directors; and
  • protection from director disqualification proceedings for cooperating directors.

Our Competition & Antitrust team advises clients upon achieving their commercial aims in compliance with UK and EU competition law. The team also acts on high-profile competition law investigations, and frequently advises clients upon making immunity and leniency applications. With our dedicated Dawn Raid Response Unit of specialists across our UK offices, and our track record of successfully delivering client-focussed outcomes, organisations ranging from publicly listed companies to family-owned businesses rely upon us to safeguard their interests when faced with the threats posed by competition law investigations.

[1] CMA press release, "Two construction firms admit to illegal cartel", 13 December 2018, available at: www.gov.uk/government/news/two-construction-firms-admit-to-illegal-cartel

[2] ibid.

[3] CMA press release, "Construction firms fined £36 million for breaking competition law", 23 October 2019, available at: www.gov.uk/government/news/construction-firms-fined-36-million-for-breaking-competition-law

[4] CMA press release, "Two construction firms admit to illegal cartel", 13 December 2018.

[5] CMA case page, "Supply of precast concrete drainage products: criminal investigation", available at; www.gov.uk/cma-cases/criminal-investigation-into-the-supply-of-products-to-the-construction-industry

[6] CMA case page, "Supply of precast concrete drainage products: director disqualification", available at: www.gov.uk/cma-cases/supply-of-precast-concrete-drainage-products-director-disqualification


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