Demolition company director disqualified for seven years

31 May 2023

The Competition and Markets Authority (CMA), the United Kingdom’s principal competition body, has secured the disqualification of another company director following its investigation into illegal cartel behaviour within the construction industry.

The announcement, which follows three disqualifications in March alongside fines for a total of 10 demolition contractors, said: “Nicholas Brown, now managing director of the Brown and Mason Group, was a director of Brown and Mason Limited at the time the illegal cartel activity took place. Following a number of admissions, Mr Brown has been disqualified for a period of seven years.

“Nicholas Brown has admitted being personally involved in two breaches of competition law affecting contracts for demolition services with a total value of over £30 million [US$37 million] including one relating to the Shell Building on London’s Southbank, and the other relating to the Lots Road Power Station in London.”

CMA Logo The CMA said that company directors need to take personal responsibility for ensuring their companies comply with competition law. Image: CMA

“‘Compensation payments’ with an aggregate value of £700,000 (excluding VAT) [$865,500] were paid to Brown and Mason by two competitors in return for Brown and Mason’s participation in the anti-competitive agreements. Mr Brown has admitted taking a ‘central role’ in this conduct, including by instructing staff to collect the payments by issuing invoices relating to ‘fictional services and goods’ that were not in fact ever supplied by Brown and Mason. Mr Brown further acknowledged that, as a shareholder in Brown and Mason, he stood to benefit personally from these payments, and that he understood at the time that his conduct was wrong.”

“In March 2023, 10 construction firms were fined nearly £60 million [$74 million] after the CMA found following a full investigation they had broken competition law by engaging in a form of collusive tendering known as ‘cover bidding’. Typically, cover bidding involves companies, when bidding in a competitive tender for a contract, agreeing with each other that one or more of them will place a bid that is deliberately intended to lose the contract, thereby reducing the intensity of competition.

“This type of illegal behaviour can lead to customers paying an artificially inflated price or receiving poorer quality services than if the companies had competed properly in the tender process.

“In addition, the CMA found that five of the firms [Brown and Mason, Cantillon, McGee, Scudder and Erith], on at least one occasion each, were involved in arrangements by which the ‘losers’ of the contracts were set to be compensated by the winner. Some firms produced false invoices to hide this part of the illegal behaviour.”

Michael Grenfell, the CMA’s executive director of enforcement, said: “Company directors need to take personal responsibility for ensuring that their companies comply with competition law. People and businesses need to be protected from illegal anti-competitive practices. Company directors who fall short can expect to face the prospect of disqualification.”

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Leila Steed Editor, Demolition & Recycling International Tel: +44(0) 1892 786 261 E-mail: [email protected]
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