The Competition and Markets Authority has announced an investigation into possible anti-competitive bid-rigging in relation to construction contracts (and in particular roofing contracts). These contracts are funded by the Department for Education’s school-focused Condition Improvement Fund (CIF) and are just the latest example of the CMA’s focus on enforcing competition law in the construction sector.

The CMA’s investigation started with unannounced inspections (so-called “dawn raids”) at the business premises of several companies. It is not clear what prompted these inspections, but they often follow on from one of the businesses involved “blowing the whistle” on the others.

After gathering and assessing evidence against the companies under investigation, the CMA will set out its provisional conclusions on whether the parties involved have broken competition law, at which point they will have the opportunity to respond. Cooperation now, or in response to any “statement of objections” issued after the investigation, may result in a reduced fine.

This is not the first time in recent years that the CMA has focused on alleged bid-rigging in the construction sector. In March 2023, after a similar investigation to the one just launched, the CMA found 10 companies involved in the supply of demolition and asbestos removal services had breached competition law by bid-rigging. Some directors of companies involved were disqualified and almost £60 million in fines was imposed. Following an unsuccessful appeal by one of the fined companies on the basis that its penalty was excessive, in December this was increased from £16m to £18m. The Competition Appeal Tribunal decided that by appealing the fine set, the company had breached its settlement with the CMA and forfeited a reduced fine – a reminder for any business seeking leniency from the CMA that the obligation to “cooperate” includes accepting the level of fine that the CMA issues.

Should the CMA’s recently launched investigation into bid-rigging in CIF contracts result in the imposition of penalties on any of the companies involved, that previous case suggests that they should expect significant sanctions. One of them may incur lighter sanctions than the others; if the investigation was prompted by one of the companies acting as whistleblower, that company would ordinarily enjoy immunity from civil fines, criminal penalties or director disqualification (though not from claims for damages from affected customers).

The Procurement Act 2023, which is set to come into force in early 2025, adds a further dimension to the risks of engaging in agreements that breach competition law. From February, any company involved in such conduct is likely to find itself added to a central disbarment register and banned from all UK public contracts.

Between the growing risks of significant fines and other penalties, and missing out on all public sector contract opportunities, it is more important than ever for construction companies to take steps to ensure that their staff understand the type of conduct that the law prohibits and the risks of getting involved in it. As ever, robust and clear internal compliance policies are the best way to protect the business and its directors and employees personally from these risks.