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£2.6m in fines for three companies participating in cartel (29 March 2016)

Date: 29/03/2016
Duncan Lewis, Crime Solicitors, £2.6m in fines for three companies participating in cartel

Three companies who took part in a cartel between 2005 and 2012 have agreed to pay fines totalling more than £2.6 million in a settlement with the Competition and Markets Authority (CMA).

The level of the fine includes a discount to reflect the resource savings to the CMA generated by the companies’ admissions and their co-operation with the CMA’s investigation.

Franklin Hodge Industries Ltd, Galglass Ltd and Kondea Water Supplies Ltd agreed with each other and with CST Industries (UK) Ltd to share the market between them, fix prices and rig bids in relation to the supply of cylindrical galvanised steel tanks in the UK – which are used for water storage in larger buildings, such as schools, hospitals and other commercial and public buildings, as well as to supply the water used in fire sprinkler systems.

As part of the cartel, the companies divided up customers among themselves and agreed prices for a range of galvanised steel tanks.

Under the arrangement, if a customer had been allocated to a particular company, that company would quote a lower price for the job, with the other cartel members quoting a higher price, so as to give the appearance of competition –where, in fact, there was none.

These arrangements were agreed and reinforced at regular meetings between the participating companies over a seven-year period, as well as through contacts concerning particular bids.

Provided it continues to co-operate and complies with the other conditions of the CMA’s leniency policy, CST Industries (UK) Ltd – together with its parent company, CST Industries Inc – will not receive a fine, having reported the cartel to the CMA’s predecessor and co-operated with the investigation, in accordance with the CMA’s leniency policy.

Franklin Hodge Industries Ltd also received a discount under the leniency policy for co-operating with the investigation.

The CMA also conducted a related criminal investigation into whether individuals had committed an offence under Section 188 of the Enterprise Act 2002, the criminal cartel offence.

The proceedings have now concluded, with one conviction following a guilty plea and two acquittals following a trial by jury.

CMA Executive Director with responsibility for enforcement, Michael Grenfell, said:

“Vigorous competition between businesses has benefits for customers and for the economy, keeping prices down and encouraging businesses to be more efficient and to improve quality.

“The companies in this case agreed to restrict competition, with the aim of maintaining or increasing prices for galvanised steel tanks – an important product which forms part of the water sprinkler systems used in buildings to protect the public against fires.

“As these fines demonstrate, the CMA will not tolerate such practices.”

The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK.

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