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Construction under the anti-trust spotlight again

On 28 February 2017, the Competition and Markets Authority (CMA) announced a further investigation into anti-competitive behaviour within the construction industry, particularly relating to supplies to the sector.

Certain suppliers are suspected of agreeing to fix the prices of their products and services or agreeing with each other not to compete for business.

While the precise details of this investigation have not yet been released, this is the CMA's second on-going civil investigation into suspected price-fixing and/or market sharing practice. The first investigation, which commenced in April 2016, relates to the supply of precast drainage products and is running parallel to a criminal cartel offence prosecution - where one individual has already pleaded guilty.

The CMA has extensive powers to investigate those suspected of infringements and to impose remedies including fines of up to 10% of worldwide turnover on the businesses concerned as well as pursuing individuals within those businesses who are directly or, in some instances, indirectly responsible.

If suppliers are found to have breached competition law, those parties who have suffered harm (such as building contractors and clients further down the supply chain who have absorbed any increased costs) will also have a right of action against the suppliers in damages.

What can businesses in the construction industry expect?

The CMA has committed to step up the scale and pace of its enforcement against anticompetitive or unfair practices. Given the CMA's clear interest in the construction industry, the sector is likely to experience more antitrust scrutiny in future, which underlines the need for robust compliance policies, as well as specialist advice on agreements or arrangements (e.g. consortium or co-operation agreements) which have a greater potential to raise competition risks.

While organisation-wide compliance policies are useful, businesses should also ensure that personnel who are more likely to be involved in setting or negotiating commercial terms and organising tenders etc. receive targeted training to spot and manage anti-trust risks. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions

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