14.12.18
HS1 and Crossrail suppliers admit to running ‘illegal cartel’ for 7 years
Two UK rail suppliers to major projects such as HS1 and Crossrail have admitted to operating an illegal cartel for almost seven years with the goal of increasing prices and reducing competition in the drainage market.
The Competition and Markets Authority (CMA) provisionally found that the two companies – Derbyshire-based Stanton Bonna Concrete Ltd and Somerset-based CPM Group Ltd – broke competition law by holding regular secret meetings to set up and operate an illegal cartel.
According to the investigation, the goal of the meetings was to fix or coordinate prices and share out the market for certain pre-cast concrete drainage products in Great Britain, with the ultimate aim of hiking up prices and fending off competition.
These products are currently used in several large infrastructure projects beyond just rail, such as water management and roads. Customers include engineering and construction firms, utilities providers, and local and central government.
Throughout the period of the alleged cartel activity, which started back in 2006, the two firms were leading players in the field, accounting for over half of the market. From 2010 onwards, they held over 90% of this market.
Stanton Bonna is a well-known railway supplier providing track and drainage solutions to the industry. Its sleepers have been installed on HS1, Nottingham Express Transit, Manchester Metrolink, Midland Metro, the DLR, and the Sheffield Supertram, for example, and its sister company SBC Rail currently supply concrete track solutions to Crossrail.
CPM Group, which is now owned by major supplier Marshalls, currently works on projects such as HS2 and Hinkley Point, although this was not the case while the cartel was taking place. As well as precast concrete drainage products, the company’s precast platform system, Stepsafe, is used to lengthen existing platforms or build new ones, while its Redi-Rock concrete walling is used to protect the rail line against erosion and landslips.
A third company, the Northern Irish FP McCann, is also under investigation by the CMA but has not made any admissions. The firm previously secured a contract with Balfour Beatty to supply precast modular platform units to Crossrail, and has worked with Morgan Sindall to provide a traction supply point for Crossrail as part of the London Power Tunnels programme.
Michael Grenfell, executive director of enforcement at the CMA, said that cartels can damage competition and lead to less customer choice, less innovation, and higher prices for customers.
“We’ve provisionally found that these three firms secretly shared out the market and colluded on prices for construction products used in many building projects across Great Britain,” he explained.
“The CMA does not tolerate such practices and will use our enforcement tools to crack down on those it believes are taking part in illegal cartels.”
As part of a settlement process, both Stanton Bonna and CPM admitted to participating in the alleged cartel and have agreed to pay fines, which will be determined at the end of the CMA probe. FP McCann is not part of this settlement, so at this stage no assumption can be made that it has definitely broken the law.
A spokesperson for CPM Group told RTM: “We accept the CMA’s ruling which follows our co-operation with it during its investigation. The ruling relates to events that occurred more than five years ago and involved CPM’s former directors while the firm was under their ownership.
“In the years since the incident, CPM Group, under the guidance of new ownership and a new management team, has established robust and proactive processes to ensure compliance with competition law. The ruling will not impact on CPM’s current trading.”
(Top image: Crossrail)