48/05 18 March 2005

Ten roofing contractors have been found by the OFT to have agreed to fix the prices of, and in some cases to share markets for, flat roofing services in the north east of England and in Scotland through collusive tendering. They have been fined nearly £830,000 in total (reduced to nearly £560,000 by leniency).

The parties (see note 1) were found to have been involved in a series of individual agreements and concerted practices in tendering for flat roofing contracts in the period 2000-2002 in breach of the Chapter I prohibition of the Competition Act 1998.

In the north east, the contracts affected were for felt and single ply flat roofing services, and related to a number of schools, a college, a number of telephone exchanges and a business park unit.

In Scotland, the contracts affected were for mastic asphalt flat roofing services, and related to diverse contracts including a school, television studios, a town hall, a supermarket and a lighthouse.

The OFT concluded that the parties' collusion in setting tender prices and market sharing by allocating contracts between themselves? was intended to restrict or distort competition and meant that buyers were unable to obtain competitive prices when buying flat roofing services.

Sir John Vickers, OFT Chairman, said:

'Collusive tendering deprives customers of the benefits of competition. Schools, local authorities and ultimately council tax payers were among the victims in these cases.'

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

The OFT's overall investigation of various flat roofing contractors has covered different geographic regions and product lines, resulting in a number of separate decisions, including the two announced today. An earlier decision issued in March 2004 by the OFT relating to flat roofing contractors in the West Midlands was recently upheld by the Competition Appeal Tribunal (see note 2). The OFT is continuing to investigate other allegations of collusive tendering in relation to construction in relation to other regions and products. 

Agreements or concerted practices between businesses that fix prices and share markets 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 line with the OFT's leniency policy Briggs Cladding and Roofing Limited has been granted 100 per cent leniency in both decisions issued today. In addition, in the north east, Mitrepoint Limited (trading as Roofclad) has been granted 50 per cent leniency and Hylton Roofing Limited 35 per cent.

In Scotland, WG Walker and Company (Ayr) Limited has been granted 45 per cent leniency, Lenaghen Roofing Services 35 per cent; and Pirie Limited 55 per cent, which includes a 'leniency plus' uplift in recognition of the fact that Pirie was the first party to apply for leniency and voluntarily to provide information in relation to a separate product market (see note 7). The financial penalties on those parties are being reduced accordingly.

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

2.  The OFT's decision of 16 March 2004 relating to flat roofing in the West Midlands is available on the CA98 Public Register section of this website. The CAT's judgments of 24 February 2005 dismissing appeals brought by Apex Asphalt and Paving Co Limited and Richard W Price (Roofing Contractors) Limited are available on the CAT website (See OFT press release 46/04 and 36/05).

3. 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.

4.  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 high financial penalty (if it has not won leniency by bringing forward information: see note 6).

5.  Penalties for breaching the Competition Act can amount to up to 10 per cent of an undertaking's worldwide turnover in its last business year.

6.  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 is available to the first member of the cartel to come forward with relevant information before the OFT has commenced an investigation. Significant reductions in penalty of up to 100 per cent are available where the undertaking is the first to come forward with information but does so after the OFT has commenced an investigation; and reductions of up to 50 per cent are available where the undertaking (a) 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 (b) would have qualified for total immunity or a reduction in penalty of up to 100 per cent had it not taken steps to corece another undertaking to take part in the cartel activity.

The OFT's decisions of 8 April 2005 relating to flat roofing in the North East and Scotland are available from the CA98 Public Register section of this website.