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Concrete cartel operated in UK

In 2019, three concrete companies were found to have entered into illegal arrangements under which they fixed or coordinated their prices, shared out the market by allocating customers, and exchanged competitively sensitive information, according to a government report.

The businesses manufactured pre-cast concrete drainage products which are essential for roads and railways and used in large infrastructure projects. The customers who typically need to buy these types of products include local and national government bodies, as well as utilities, engineering and construction firms. The companies were fined £36 million and two directors have been disqualified for 6.5 and 7.5 years with additional disqualification cases pending in court.

The government report, based on an investigation by the Competition and Markets Authority (CMA), revealed that the cartel arrangement began in 2006 after a period of fierce competition and low prices in response to tough market conditions. The rivals met to end this situation and create what one of them described as a ‘new era of trust’. Regular, secret cartel meetings took place (four of which were secretly recorded by the CMA), held away from business premises, in hotel meeting rooms. One member of the cartel kept track of the discussions in a ‘Boys Spoils’ file; others referred to the arrangement as the ‘Pigeon Club’ – clearly recognising that that this was not ordinary business practice.

The businesses discussed and agreed their spot market price lists, where prices are agreed on a deal by deal basis. These were then used by sales teams as a basis for negotiating with customers - in effect, the agreed list prices acted as ‘targets.’ The businesses also agreed that they would not compete for each other’s customers on certain fixed price contracts (‘term deals’) – a so-called ‘no poaching’ arrangement. The rivals also regularly shared competitively sensitive information so they could monitor each other’s actions: this meant that they all knew where they stood with one another (including in terms of market share) and could plan their approach accordingly.

In this case, individuals within the businesses had signed compliance documents and/or declarations saying that they would not break competition law. But, by itself, the signing of such documents does not provide a safeguard. Such documents must be understood and followed. Discussing and agreeing price lists with competitors, market sharing and the sharing of competitively sensitive information are all illegal anti-competitive practices. The businesses did not operate independently of each other. Through regular contact, they cooperated in relation to price and the allocation of customers. Their aim was to increase prices, and maintain their market position without having to compete fairly.

One of the companies is appealing the CMA’s decision. This appeal goes to both the findings in the decision and the amount of the penalty. The CMA is defending the case. The other companies involved admitted breaking the law and accepted the penalties that were imposed on them.

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