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The CAT has today handed down judgment in a Competition Act 1998 appeal brought against the CMA by the leading demolition services provider Keltbray.
In March 2023 the CMA published its decision “Supply of demolition and related services”, which fined ten leading suppliers of demolition services for colluding in tenders for contracts to demolish various buildings in England. The Infringements took the form of “cover bidding”, which involves a company submitting a price in a tender process not designed to win the contract, but which has been decided upon in conjunction with a competitor in the process, in order to give the appearance of competition.
Keltbray entered into a settlement agreement with the CMA in 2022, in which it admitted liability for eight of the infringements in question and accepted that the CMA could impose a maximum penalty of £20m. As a result of the agreement, Keltbray received a 20% settlement discount, which reduced its penalty to £16m.
Following a week-long trial, during which the CAT heard factual and expert economic evidence, the penalty has been reduced but the settlement discount has been revoked, leading to a final penalty of £18m.
Grounds 1 and 2 of the appeal concerned the CMA’s definition of the relevant market for the purposes of calculating Keltbray’s penalty. The CAT rejected both grounds. Under the former, the CAT accepted that it was reasonable for the CMA to define the market in a way that recognised potential wider effects of Keltbray’s conduct beyond the infringing tenders in question, including in circumstances where Keltbray had not sought to challenge the CMA’s conclusion that its conduct amounted to a by object infringement. Under Ground 2, the CAT rejected Keltbray’s arguments, supported by expert economic evidence, that the CMA should have segmented the demolition services market according to the complexity of the services provided.
Ground 3 concerned the proportionality of the overall penalty. The CAT adopted a different view to the CMA of the seriousness of Keltbray’s conduct and the relevance of Keltbray’s low profit margins. It therefore decreased the overall penalty by £2m.
Finally, the CAT allowed the CMA’s application to revoke the 20% settlement discount, concluding that there was no unfairness in holding Keltbray to its original bargain and that the discount protected important policy considerations relating to the settlement process.
Philip Woolfe KC and David Gregory acted for Keltbray.
Rob Williams KC and Will Perry acted for the CMA. Daisy Mackersie also acted for the CMA at an earlier stage of proceedings.