IT is vital the construction industry educates itself on competition law – according to East Midlands-based law firm Nelsons.
The warning comes after two of the UK’s largest rolled lead sheet suppliers – Associated Leads Mills and BLM British Lead – admitted to taking part in anti-competitive arrangements between October 2015 and March 2017 following an investigation by the Competition and Markets Authority (CMA). As part of an agreement reached with the CMA, the two firms could face fines of more than £11 million.
Following the investigation, which started in July 2017, the CMA has issued revised provisional findings indicating that Associated Lead Mills and BLM British Lead were part of anti-competitive arrangements that included:
- Sharing the market, including by arranging not to target certain customers;
- Colluding on prices;
- Exchanging commercially sensitive information on prices; and
- Arranging not to supply a new business that risked disrupting the firms’ existing customer relationships and which was a potential competitor in the market.
Emma Ward, partner in Nelsons’ dispute resolution department, who is Midland Lead’s solicitor, said: “The admissions and the CMA’s provisional findings are strong reminders that companies need to understand the obligations imposed upon them by competition law.
“An infringement of competition law can occur at any level in a supply chain, with anti-competitive practices ultimately depriving customers of the efficiency, innovation and fair pricing that fair competition encourages. In addition, such practices can make it extremely difficult for other businesses that aren’t part of the arrangement to survive and grow.
“If you believe that your business has suffered a loss as a result of anti-competitive practices, then you could have a right to claim compensation.”
Midland Lead – a family-owned company that has been manufacturing machine cast lead for the past 37 years – is actively against cartels, stating that they not only tarnish the reputation of the industry, but also cheat customers.
Boudewijn Tuinenburg, managing director at Midland Lead, said: “We hope that the outcome of CMA’s investigation and provisional findings send a warning to the construction industry of the importance of understanding competition law.
“We have never been a part of the arrangements between Associated Leads Mills and BLM British Lead or arrangements with any other rolled lead sheet manufacturer and we pride ourselves on operating with integrity. We work independently and welcome competition as we know it encourages innovation and pushes for excellence in customer service.”
Lynn Street, marketing and sales manager at Midland Lead, added: “We have successfully grown our business in the UK and overseas by being innovative, customer-focused and providing high quality products in an ethical manner.
“Together as one industry sector, we can promote lead, share innovative ideas and fund research. However, the fact of the investigation and the provisional findings mean that as an industry, we will never be able to sit down in one room without suspicion – and that is unfortunate for the entire industry.”
According to research commissioned by the CMA in 2018, 77% of UK businesses admit to not understanding competition law, with 79% of respondents stating that they regularly meet with rivals in social situations.
Emma said: “It’s important that businesses understand the rules. An anti-competitive arrangement can be reached informally over a beer – it doesn’t need to be documented by a formal, written agreement. The informal nature of some business deals, coupled with the lack of knowledge, means that there is a real risk of crossing the line.
“The CMA can investigate if it has reasonable grounds to suspect there has been anti-competitive behaviour. The investigation itself can be stressful as the CMA can demand information (backed by sanctions of a fine if the request is not complied with), attend premises unannounced and require that questions are answered by any person connection with the business – from temporary staff, through to the MD.
“If competition law is found to have been infringed, the consequences are serious and can damage a business as well as an individual’s career. Companies can be fined up 10% of their annual worldwide turnover, individuals can face prosecution, and directors can be disqualified. Businesses can also suffer reputational damage.
“Proactive compliance is essential. It’s important to make sure that your business has a written competition law compliance policy and detailed staff training programme in place. A major risk factor is a lack of internal competition law awareness within a business, so these are vital to avoiding serious penalties.
“If you think you or your company might have been involved in cartel activity, seek legal advice on how best to minimise liability. The CMA has a leniency programme – this allows a party to anti-competitive conduct to avoid fines and prosecution in exchange for reporting the arrangement and cooperating with the investigation.”
Another firm, Calder Industrial Matters, remains under investigation in relation to one of the arrangements and continues to strongly deny the allegation.
In its provisional findings, the CMA alleged that Associated Lead Mills, BLM British Lead and Calder Industrial Materials – which together account for about 90% of the rolled lead market and were former members of the Lead Sheet Association – entered into a cartel to share the market among themselves. However, the CMA has now revised its provisional findings stating that there was not a single overall cartel arrangement but four individual arrangements that broke competition law.
For more information on resolving commercial, business and intellectual property conflicts, please visit www.nelsonslaw.co.uk/business-disputes or call 0800 024 1976.