A cartel of three construction suppliers colluded to keep prices high and reduce competition, the UK’s competition watchdog said on Tuesday, in the latest crackdown on anti-competitive behaviour in the industry.
The Competition and Markets Authority is investigating MGF Trench Construction Systems, Vp and Mabey Hire for sharing pricing and strategy and co-ordinating their commercial activities.
The CMA said it had provisionally found that the three businesses, which supply products for housing developments, railway lines and water pipes, had formed a cartel in breach of competition law.
The regulator has issued millions of pounds in penalties over cartels, including imposing fines of £7m in March on five companies that design and fit out offices. It said last month it had found “a lot of evidence of anti-competitive conduct in the construction industry”.
The investigation came to light after Mabey turned whistleblower and reported the companies’ behaviour to the regulator. It will now escape any fine, in accordance with the CMA’s leniency programme.
Vp and MGF operated the cartel for nearly two years and Mabey took part for five months, the CMA said.
Vp was one of the worst performing stocks on the FTSE-All Share index on Tuesday, falling 16 per cent.
Founded in 1954 and listed in 1963, its business is focused on specialist rental hire for the construction and infrastructure industries.
It is a supplier of trackside services to Network Rail and London Underground, and has a market capitalisation of more than £400m.
MGF and Mabey are both privately owned, and provide products used to protect excavations and keeping building sites safe.
Mabey Hire is part of family-owned engineering company Mabey Group, which has been operating for nearly 100 years and has recently worked on the British Antarctic Survey’s research facilities.
MGF was founded in Manchester in 1981, and operates a hire fleet across England.
“It is crucial that builders and their customers benefit from genuinely competitive pricing for this essential equipment,” said Michael Grenfell, the CMA’s executive director for enforcement.
The CMA said on Tuesday it would listen to representations from the three supply companies before making a final decision as to whether the law had been broken.
“Mabey proactively raised concerns with the CMA about potential anti-competitive behaviour, and gave its full support and co-operation to their investigation,” the company said in a statement.
Vp said in an update to the stock exchange that the findings covered only one part of its business, and that it was co-operating with the regulator.
“MGF has co-operated fully in a detailed investigation conducted by the Competition and Markets Authority and will continue to do so,” the company said.
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