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Thu July 25 2024

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Groundworks suppliers fined £15m for price fixing

17 Dec 20 Vp plc and MGF (Trench Construction Systems) Ltd have been fined £11.2m and £3.7m respectively for collusion.

Groundforce struts (MGF's are similar but red)
Groundforce struts (MGF's are similar but red)

An investigation by the Competition & Markets Authority (CMA) found that Vp and MGF shared information on pricing and strategy, to their mutual benefit, but at the expense of their customers.

They colluded to reduce competition and keep prices up in the market for propping and shoring equipment.

The CMA found that the companies colluded illegally to reduce competition and maintain or increase prices. This involved sharing confidential information on future pricing and commercial strategy. They also coordinated their commercial activities to reduce uncertainty, including monitoring each other's prices and challenging quotes they deemed too low.

The investigation began in February 2017 after a third supplier, Mabey Hire, blew the whistle and informed the CMA. Mabey confessed its role and has avoided a fine in accordance with the CMA's leniency programme.

The CMA has found that illegal collusion between Vp – specifically its Groundforce division – and MGF lasted for periods totalling nearly two years; Mabey took part for a single period of five months.

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Vp plc turned over £363m for the year ending 31st March 2020 and made a pre-tax profit of £28.4m. MGF (Trench Construction Systems) turned over £38m in the year to 30th June 2020 and made a pre-tax profit of £7.5m.

CMA enforcement director Michael Grenfell said: "Today's announcement shows that 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."

Two suppliers of rolled roofing lead were fined more than £9m last month; three producers of pre-cast concrete drainage products have been issued with fines totalling more than £36m in October 2019; and in March 2019 five office fit-out contractors in London were hti with fines totalling £7m for cover pricing.

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