Another demolition director banned after bid rigging probe
The Competition and Markets Authority (CMA) has secured the disqualification of another company director following its investigation into illegal cartel behaviour within the demolition industry.
Nicholas Brown, now Managing Director of the Brown and Mason Group, was a director of Brown and Mason Limited at the time the illegal cartel activity took place.
Following a number of admissions, Brown has been disqualified for a period of seven years.
He admitted being personally involved in two breaches of competition law affecting contracts for demolition services with a total value of over £30m including one relating to the Shell Building on London’s Southbank, and the other relating to the Lots Road Power Station in London.
‘Compensation payments’ with an aggregate value of £700,000 (excluding VAT) were paid to Brown and Mason by two competitors in return for Brown and Mason’s participation in the anti-competitive agreements.
Brown has admitted taking a ‘central role’ in this conduct, including by instructing staff to collect the payments by issuing invoices relating to ‘fictional services and goods’ that were not in fact ever supplied by Brown and Mason.
He further acknowledged that, as a shareholder in Brown and Mason, he stood to benefit personally from these payments, and that he understood at the time that his conduct was wrong.
In March 2023, 10 construction firms were fined nearly £60m after the CMA found following a full investigation they had broken competition law by engaging in a form of collusive tendering known as ‘cover bidding’.
Typically, cover bidding involves companies, when bidding in a competitive tender for a contract, agreeing with each other that one or more of them will place a bid that is deliberately intended to lose the contract, thereby reducing the intensity of competition.
The 10 companies involved were: Brown and Mason, Cantillon, Clifford Devlin, DSM, Erith, JF Hunt, Keltbray, McGee, Scudder and Squibb.
In addition, the CMA found that five of the firms, on at least one occasion each, were involved in arrangements by which the ‘losers’ of the contracts were set to be compensated by the winner. Some firms produced false invoices to hide this part of the illegal behaviour.
In February this year, the CMA secured legally binding disqualification undertakings from Michael Cantillon (former director of Cantillon), David Darsey (former director of Erith) and Paul Cluskey (director of Cantillon).
Brown did not offer an undertaking until after the CMA put him on formal notice of its intention to apply to the court for a disqualification order against him. Had he given an undertaking before the CMA issued the formal notice, his period of disqualification would not have been as long.
Giving an undertaking means Brown agrees to be disqualified from being a director of a company, or otherwise being involved in the management of any UK company, for seven years unless he has the permission of the court.
Michael Grenfell, the CMA’s Executive Director of Enforcement, said: “Company directors need to take personal responsibility for ensuring that their companies comply with competition law. People and businesses need to be protected from illegal anti-competitive practices. Company directors who fall short can expect to face the prospect of disqualification.”