A watchdog has provisionally found that three major suppliers to the construction industry formed a cartel to jack up prices in a breach of competition law.
The Competition and Markets Authority (CMA) said it provisionally found that MGF Trench Construction Systems, Yorkshire-based Vp and Mabey Hire “formed a cartel to reduce competition and keep prices up”.
The trio supply groundworks products to the construction industry and stand accused of sharing confidential information on pricing and commercial strategy, as well as co-ordinating their commercial activities.
In its findings, the CMA said that Vp and MGF operated the cartel for nearly two years and Mabey took part for a single period of five months.
The companies’ alleged behaviour came to light after one of the firms blew the whistle and brought information about the conduct to the CMA’s attention.
Mabey has confessed its role and will not be fined, in accordance with the watchdog’s leniency programme, provided it continues to co-operate with the investigation.
Michael Grenfell, the CMA’s executive director for enforcement, said: “These are three major suppliers of equipment used to keep construction workers safe. It is crucial that builders and their customers benefit from genuinely competitive pricing for this essential equipment.
“Everyone must follow competition law, which protects customers from being exploited and paying more, as well as encouraging companies to compete for business in other ways - through innovation, quality and service.
“The CMA uses its powers vigorously and robustly to root out illegal cartels.”
Groundworks products such as braces, props and sheeting are used to protect excavations, such as those made for foundations or for laying pipes, from collapse and are important for keeping construction sites safe.
The three companies supply these products for a range of major housing and road developments, railway line works and water pipe upgrades.
Vp said it is reviewing the findings and will “continue to co-operate fully with the CMA”.
In a statement, VP said: “Vp plc, the equipment rental specialist, notes that the Competition and Markets Authority has today announced its provisional findings in relation to an investigation into the supply of groundwork products for hire in the UK.
“The subject of the provisional findings is suspected anti-competitive conduct as regards the supply of groundworks products in the UK. This is an area of activity for part of the group’s excavation support systems business. No other Vp businesses are included in this investigation.
“Vp is reviewing these provisional findings and will continue to cooperate fully with the CMA. The group will make further announcements as appropriate.”
The CMA statement added: “The CMA’s findings are, at this stage in its investigation, provisional and do not necessarily lead to a decision that the companies have breached competition law.
“The firms now have the opportunity to consider the detail of the CMA’s provisional findings and respond to it.
“The CMA will carefully consider any representations made before issuing its final findings as to whether the law has been broken.”
The CMA said it also runs a Stop Cartels campaign, which aims to educate businesses about which practices are illegal and urges people to come forward if they suspect a business has taken part in cartel behaviour, such as fixing prices or rigging contracts.
The CMA is an independent non-ministerial department. it currently employs around 650 people. It has representatives in Scotland, Wales and Northern Ireland.