Judgment (Non-confidential version)

Neutral citation:

[2011] CAT 11


15 Apr 2011



Judgment on an appeal against a decision of the Office of Fair Trading dated 21 September 2009 entitled “Bid rigging in the construction industry in England” (“the Decision”). In the Decision the OFT found that the Appellants had engaged in cover pricing contrary to the Chapter I prohibition contained in section 2(1) of the Competition Act 1998 (“the 1998 Act”). The OFT imposed penalties totalling £129.2m, of which a penalty of £881,749 was imposed on the Appellants.

The Appellants appealed the Decision both as regards liability and the amount of the penalty imposed on them. The Tribunal dismissed the Appellants’ grounds of appeal on liability, concluding in particular that:

- The OFT was correct to include the Appellants within the scope of its investigation when deciding which suspect tenders to pursue in the Statement of Objections.

- Infringement 6 was not “statute-barred” by the operation of Council Regulation (EC) No. 1/2003, section 60 of the 1998 Act and/or the Limitation Act 1980. Further the OFT correctly applied the transitional provisions of the 1998 Act in relation to this infringement.

- The evidence relied on by the OFT, viewed as a whole, demonstrated on the balance of probabilities that Quarmby engaged in cover pricing in relation to the three infringements identified in the Decision.

- The Appellants were wrong to suggest that Infringement 233 should have been excluded from the scope of the investigation because the client had not been deceived into thinking the cover price that it had received was genuine. Rather, it was clear that the client was not aware that a cover price had been submitted.

As regards the Appellants’ challenge to the penalty imposed on them, the Tribunal upheld certain challenges, but rejected others, concluding in particular that:

- The OFT was wrong to use turnover in the financial year preceding the Decision at Step 1 of the penalty calculation, and should instead have used turnover in the financial year preceding the infringement.

- The Appellants’ behaviour should have been attributed a level of seriousness lower than the starting point percentage of 5% chosen by the OFT in this case.

- The Appellants were wrong to submit that the OFT defined the relevant markets too broadly in the Decision.

- The OFT was entitled to rely on the turnover information originally provided by the Appellants in this investigation.

- The OFT should have had greater regard for the particular circumstances of the industry, including the prevalent low margins on turnover.

The Tribunal accordingly concluded that the penalty imposed on the Appellants could not stand and should be reassessed. The original penalty of £881,749 was varied to £213,750.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.