Construction industry suppliers fined £15m for breaking competition law

Two Yorkshire and Lancashire-based companies which supply groundworks products to major construction firms, have been fined £15m.

The action against Vp plc and MGF (Trench Construction Systems) Ltd followed an investigation by the Competition and Markets Authority (CMA).

VP plc, headquartered in Harrogate, was fined more than £11.2m, while MGF, based in Ashton-in-Makerfield, Wigan, was fined £3.7m.

The fine will not come as a surprise to VP Group which in its recent half year results, included an exceptional cost of £11.4m for what the firm’s CEO Neil Stothard  considered a “worst case scenario fine” relating to this investigation.

The CMA found the companies colluded illegally to reduce competition and maintain or increase prices.

This involved sharing confidential information on future pricing and commercial strategy.

VP plc and MGF also coordinated their commercial activities to reduce uncertainty, including monitoring each other’s prices and challenging quotes they deemed too low.

The CMA has found the illegal collusion between Vp and MGF lasted for periods totalling nearly two years, and a third groundworks company, Dewsbury-based Mabey Hire Ltd, took part for a single period of five months.

Mabey has not been fined as it brought the illegal activity to the CMA’s attention and fully cooperated with the investigation, under the CMA’s Leniency Programme.

Groundworks products are used to protect excavations – such as those made for building foundations or for laying pipes – from collapse and are crucial for safe construction work.

The companies supply these products for a range of major housing and road developments, railway line works and water pipe upgrades.

Michael Grenfell, executive director of enforcement at the CMA, said: “Today’s announcement shows the CMA continues to crack down on illegal cartel behaviour and protect consumers.

“The CMA will not tolerate illegal conduct which weakens competition and keeps prices up at the expense of consumers.

“This is the fourth time in the last two years that the CMA has fined a cartel in the construction sector.

“It is essential that the sector, which is crucial to the success of our country’s economy, can benefit from a competitive marketplace to deliver value, innovation and quality.”