The Competition and Markets Authority (CMA), the UK's principal competition body, has secured the disqualification of another company director following its investigation into illegal cartel behaviour within the construction 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, Mr Brown has been disqualified for a period of 7 years.
Nicholas Brown has admitted being personally involved in two breaches of competition law affecting contracts for demolition services with a total value of over £30 million 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. Mr 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. Mr Brown 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 £60 million 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.
This type of illegal behaviour can lead to customers paying an artificially inflated price or receiving poorer quality services than if the companies had competed properly in the tender process. 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 5 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).
Nicholas 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 Mr Brown agrees to be disqualified from being a director of a company, or otherwise being involved in the management of any UK company, for 7 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.
Today's announcement brings the total number of director disqualifications secured for illegal cartel behaviour to 29 since December 2016, when the CMA began actively using this power.
The CMA has issued a range of guidance including: how to help directors understand how to avoid disqualification which is available on the CMA website; the 'Cheating or Competing' campaign which advises businesses on how to spot, report and deter illegal anti-competitive practices such as market sharing, fixing prices and bid-rigging; and guidance to help businesses and directors understand more about how to comply with competition law.
