On 26th February 2020, the Competition and Markets Authority (‘CMA’) launched its ‘Cheating or Competing Campaign’, which targets a multitude of sectors, placing particular emphasis on construction companies, which are no strangers to action by the CMA.
The aim of the campaign is to increase awareness of anti-competitive practices amongst businesses in addition to highlighting the consequences that these practices have for both businesses and consumers. The Competition Act 1998 makes it clear that anti-competitive behaviour is illegal and the CMA’s campaign highlights that breaching this can have very serious implications for companies such as fines, business reputation damage or even imprisonment.
The construction sector and anti-competitive behaviours
Over recent years, the construction sector has been under the watchful eye of the CMA due to the frequency of anti-competitive behaviours across the industry, especially during the tendering process. According to a recent CMA survey of 400 UK senior representatives from construction firms, only 6% of firms in this sector could correctly define competition law and what it was designed to prevent. Worryingly, 32% thought that agreeing not to supply each other’s customers was legal. Market sharing, bid rigging and price fixing all appear to be common threats to competition within the construction industry and this is something which needs to be addressed.
These anti-competitive behaviours create an illusion of competition which consequently leads to both businesses and consumers being affected. Examples of such are: prices being kept artificially high; consumers not having a real choice; honest, non-colluding businesses not being able to compete with those who are and ultimately the weakening reputation of the industry as a whole.
Public procurement and anti-competitive behaviour
Public authorities and utilities who run public procurement processes also play important roles in spotting and discouraging anti-competitive behaviour, for example through the use of robust disqualification grounds, and anti-collusion checks in the early stages of a procurement exercise. Of course, in the realm of public sector contracts, contracting authorities are themselves subject to rules on public procurement (and utility companies are subject to similar rules), which act as a further guard against anti-competitive practices among companies that bid for such work.
About our team
We have extensive experience advising on public procurements under the Public Contracts Regulations and Utilities Contracts Regulations, and would be happy to advise further on managing public procurement processes, including measures to tackle anti-competitive behaviour. We can also advise on all competition law matters, including in relation to market abuse, anti-competitive behaviour and State aid.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.
