Judgment

Neutral citation:

[2011] CAT 7

Published:

24 Mar 2011

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Summary:

Judgment on six appeals 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 each of the Appellants had engaged in cover pricing contrary to the Chapter I prohibition contained in section 2(1) of the Competition Act 1998. The OFT imposed penalties totalling £129.2m, of which £15.5m were imposed on the Appellants.

The Tribunal accepted some of the challenges to the methodology adopted by the OFT in the Decision. In particular, the Tribunal concluded that the OFT had erred in its interpretation of its Penalties Guidance as regards the appropriate year for determining “relevant turnover”; the Guidance should be interpreted as referring to the year preceding the date when the infringement came to an end. The Tribunal also held that the application of the so-called ‘Minimum Deterrence Threshold’ by the OFT led to disproportionate and excessive fines. However the Tribunal rejected the criticism that the OFT should not have imposed a separate fine for each infringement.

The Tribunal considered a number of challenges based on characteristics of the construction industry which it was alleged the OFT failed to take into account adequately or at all. The Tribunal rejected the challenge to the OFT’s relevant product market definition, but accepted that the high turnover and low margin nature of the construction industry was relevant to the calculation of the penalties. The Tribunal also accepted that the OFT had failed adequately to take into account the general mitigation resulting from the perceptions of legitimacy of that practice in the construction industry.

The Tribunal rejected all of the challenges alleging that the fines imposed were excessive in comparisons with fines imposed either in other fields of law or in other competition cases or on other addressees of the Decision.

Having resolved further issues specific to the individual cases, the Tribunal then fixed the penalties imposed on the Appellants as follows:
– The penalty imposed on Galliford Try was fixed at £465,000 each for Infringements 42, 142 and 186 making a total penalty of £1,395,000.

– The penalty imposed on Apollo was fixed at £133,000 each for Infringements 154, 199 and 203, making a total penalty of £399,000.

– The penalty imposed on Seddon was fixed at £164,000 each for Infringements 23, 39 and 176, making a total penalty of £492,000.

– The penalty imposed on Interclass was £162,000 each for Infringements 75 and 150, making a total penalty of £324,000.

– The penalty imposed on Tomlinson was £156,000 each for Infringements 46, 187 and 201, making a total penalty of £468,000.

– The penalty imposed on Sol was £234,000 for each of Infringements 142, 156 and 187 making a total penalty of £702,000.

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