OFT fines West Midlands roofing contractors for price-fixing

46/04 17 March 2004

Nine roofing contractors have been found by the OFT to have agreed to fix the prices of repair, maintenance and improvement (RMI) services for flat roofing in the West Midlands through collusive tendering, and fined nearly £300,000 in total.

The parties (see note 1) were found to have been involved in a series of individual agreements or concerted practices in tendering for flat roofing contracts in the West Midlands in the period 2000 - 2002 in breach of the Chapter I prohibition of the Competition Act 1998. The contracts affected by collusive tendering were a number of schools, a community library, a shopping centre and a car park.

The OFT concluded that the parties' collusion in setting tender prices was intended to restrict or distort competition and meant that buyers were unable to obtain competitive prices when tendering for RMI services for a flat roof locally.

John Vickers, OFT Chairman, said:

'Collusive tendering deprives customers of the benefits of competition. Schools were among the victims in this case.'

The OFT began formally investigating the arrangements between a group of roofing contractors in June 2002 after it decided that information which it had received gave reasonable grounds to suspect that certain roofing contractors had been engaged in collusive tendering.

Agreements or concerted practices between businesses that fix prices by way of collusive tendering are among the most serious infringements of the Competition Act. Financial penalties are being imposed on parties, subject to the operation of the policy to give lenient treatment for undertakings coming forward with information in Competition Act cases.

In line with the OFT's leniency policy Briggs Cladding & Roofing Limited has been granted 100 per cent leniency and Howard Evans (Roofing) Limited has been granted 50 per cent leniency and the financial penalties on them are being reduced accordingly.

The full text of the decision will be available soon under the CA98 Public Register decisions section.

NOTES

1. The business involved in the OFT investigation (with fines in brackets) were: Apex Asphalt & Paving Co. Limited (£35,922), Briggs Cladding & Roofing Limited (£ nil), Brindley Asphalt Limited (£55,540), The General Asphalte Company Limited (£63,192), Howard Evans (Roofing) Limited (£35,510), Richard W Price (Roofing Contractors) Limited (£18,000), Redbrook Mastic Asphalt and Felt Roofing Limited (£17,802), Rio Asphalt & Paving Co. Limited (£45,049), and Solihull Roofing and Building Co Limited (£26,606).

2. The Competition Act 1998 prohibits agreements, practices and conduct that have a damaging effect on competition in the UK. The Chapter I prohibition covers anti-competitive agreements and concerted practices, that have the object or effect of preventing, restricting or distorting competition in the UK or a part thereof.

3. Cartels are a particularly damaging form of anticompetitive agreement. Their purpose is to increase prices and as a result they cause harm to the consumers of the goods or services concerned. Any undertaking found to have engaged in cartel activity is likely to face a particularly high financial penalty.

4. Penalties for breaching the Competition Act can amount to up to 10 per cent of an undertaking's UK turnover for each year of an infringement, subject to a maximum of three years.

5. The OFT can offer leniency to undertakings that come that forward with information about a cartel that they are involved in. Total immunity from financial penalty total immunity is available to the first member of the cartel to come forward with relevant information., Significant reductions in penalty of up to 50 per cent are available in where: (i) the undertaking is not the first to come forward with information but does so before the OFT has given written notice of its proposal to make a decision that the Chapter I prohibition has been infringed; or (ii) where the undertaking would have qualified for total immunity had it not been the instigator or leader of the cartel or compelled others to join.

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