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OFT fines roofing contractors in England and Scotland

34/06    23 February 2006

The OFT has today fined 13 roofing contractors around £2.3 million in total (reduced to around £1.6 million by leniency) after they agreed to fix the prices for flat roofing and car park surfacing contracts in England and Scotland through collusive tendering.

The parties (see notes[1]) were found to have been involved in a series of separate arrangements in tendering for flat roofing and car park surfacing contracts in the South East, the Midlands, Doncaster, Edinburgh, Glasgow and London between 2000 and 2002 in breach of the Chapter I prohibition of the Competition Act 1998.

Most of the rigged contracts concerned the installation of mastic asphalt for flat roofs or car parks. The customers affected included private developers, such as for the New Bull Ring in Birmingham, as well as two local authority contracts for a swimming pool 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 buying flat roofing or car park surfacing services.

In three cases Rock Asphalte Limited paid losing contractors compensation for backing off the contract or providing a cover bid that they knew would be higher than its own tenders. Briggs Roofing & Cladding Limited was paid £15,000 and £50,000 in relation to two contracts and Prater Limited was paid £35,000 in respect of one contract.

Vincent Smith, the OFT's Director of Competition Enforcement, said:

'The OFT will levy substantial fines on companies, such as the 13 contractors in this case, which collude to rig tenders. We will act particularly severely where we find that compensation payments are offered or solicited in return for rigging bids.

'Our decision in this case is part of our ongoing competition enforcement focus on the construction industry - one of the OFT's five priority areas.'

This is the fifth infringement decision by the OFT involving flat roofing contractors and the penalties imposed today bring the total fines in this sector to just over £4.3 million (reduced to around £2.5 million by leniency) (see notes[2][3] below).

NOTES

1. The businesses involved in the OFT investigation are listed below (with number of infringements and fines in brackets). In line with the OFT's leniency policy (see notes[8]) Briggs Roofing & Cladding Limited has been granted 100 per cent leniency in recognition of the fact that it was the first party to apply for leniency and volunteer information in connection with the OFT's pre-existing investigation in this case. Six other parties were granted varying degrees of leniency.

• Anglo Asphalt Company Limited (one infringement, £2,865 reduced to £2,005 by leniency)
• Asphaltic Contracts Limited (three infringements, £22,255)
• Briggs Roofing & Cladding Limited (five infringements, £328,264 reduced to £nil by leniency)
• Cambridge Asphalte Company Limited (five infringements, £71,699 reduced to £53,774 by leniency)
• Coverite Limited (one infringement, £104,498)
• Durable Contracts Limited (two infringements, £47,221)
• Holme Asphalt (two infringements, £6,453)
• Makers UK Limited (one infringement, £526,500)
• Pirie Group Limited (including Pirie Limited and Pirie & Company (Paisley) Limited) (one infringement, £6,743 reduced to £3,034 by leniency)
• Prater Limited (two infringements, £270,432)
• Rio Asphalt & Paving Company Limited (two infringements, £12,113 reduced to £9,085 by leniency)
• Rock Asphalte Limited (17 infringements, £852,253 reduced to £511,351 by leniency)
• WG Walker & Company (Ayr) Limited (one infringement, £1,570 reduced to £863 by leniency).

2. The OFT's decision of the 15 March 2005 relating to collusive tendering for mastic asphalt flat-roofing contracts in Scotland (Scottish Roofing I), the OFT's decision of 16 March 2005 relating to collusive tendering for felt and single ply flat-roofing contracts in the North East of England (North East Roofing) and the OFT's decision of 8 July 2005 relating to collusive tendering for felt and single ply roofing in Western-Central Scotland (Scottish Roofing II) are available from the CA98 Public Register decisions section of the OFT's website.

3. The OFT's decision of 16 March 2004 relating to flat roofing in the West Midlands (West Midlands Roofing) is also available from the CA 98 Public Register decisions section. 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, but reducing the penalty imposed on the latter from £18,000 to £9,000, are available on the CAT website.

4. Four of the parties who have colluded in this case (i.e. Briggs Roofing & Cladding Limited, Pirie Group Limited, Rio Asphalt & Paving Company Limited and W G Walker & Company (Ayr) Limited) were also parties to one or more of the earlier roofing decisions. Although the collusion on the contracts with which this decision is concerned took place within the same time frame as those in the earlier cases, the OFT decided that the contracts dealt with in this decision should all be considered together because they all involved  Rock Asphalte Limited.

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

6. Cartels are a particularly damaging form of anti-competitive 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.

7. 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.

8. The OFT can offer leniency to undertakings that come forward with information about a cartel in which they are involved. 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.

9. The full text of the decision will be available shortly; the summary is currently available from the CA98 Public Register decisions section of this website.

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