In a settlement with the Competition & Markets Authority (CMA), the companies have agreed to pay fines totalling more than £2.6m for taking part in the cartel. This includes a discount to reflect the resource savings to the CMA generated by the companies’ admissions and their co-operation with the CMA’s investigation.
Under the cartel arrangements, Franklin Hodge Industries Ltd, Galglass Ltd and Kondea Water Supplies Ltd agreed with each other, and with CST Industries (UK) Ltd, to share the market between them, fix prices and rig bids between 2005 and 2012.
As part of the cartel, the companies divided up customers among themselves and agreed prices for a range of galvanised steel tanks. Under the arrangement, if a customer had been allocated to a particular company, that company would quote a lower price for the job with the other cartel members quoting a higher price, so as to give the appearance of competition where in fact there was none. These arrangements were agreed and reinforced at regular meetings between the participating companies over a seven-year period, as well as through contacts concerning particular bids.
Provided it continues to co-operate, CST Industries (UK) Ltd, together with its parent company, CST Industries Inc, will not receive a fine, having reported the cartel to the CMA’s predecessor and co-operated with the investigation, in accordance with the CMA’s leniency policy. Franklin Hodge Industries Ltd also received a discount under the leniency policy for co-operating with the investigation.
The CMA also conducted a related criminal investigation into whether the individual bosses had committed an offence under section 188 of the Enterprise Act 2002, the criminal cartel offence. These proceedings concluded in September 2015, with one conviction following a guilty plea and two acquittals following a trial by jury. [See our previous report here.]
CMA director Michael Grenfell said: “Vigorous competition between businesses has benefits for customers and for the economy, keeping prices down and encouraging businesses to be more efficient and to improve quality.
“The companies in this case agreed to restrict competition, with the aim of maintaining or increasing prices for galvanised steel tanks – an important product which forms part of the water sprinkler systems used in buildings to protect the public against fires. As these fines demonstrate, the CMA will not tolerate such practices.”