CMA cracks down on anti-competitive cover bidding

On 1 March 2019, the Competition and Markets Authority (CMA) announced that six office fit-out firms have admitted to infringing competition law by engaging in cover bidding in competitive tenders, colluding on the prices they would bid for contracts.

The businesses are Fourfront, Loop, Coriolis, ThirdWay, Oakley and JLL. Based in London and the Home Counties, all five provide services such as fit-out, design and refurbishment of commercial and non-residential premises.

The precise nature of the anti-competitive conduct remains unclear. The CMA says that each company has admitted to colluding on the prices they would bid for contracts, by engaging in cover bidding. Cover bidding often involves companies colluding with their competitors to submit bids that they know are insufficient to win the contract. It is therefore a practice that can maintain the appearance of a competitive market but in circumstances where, in reality, the actual level of competition may be significantly diminished.

The businesses in question have admitted to infringing competition law and five of them have agreed to pay fines totaling some £7 million. The sixth business, JLL, will not be fined because it brought information about the conduct to the CMA’s attention and, in accordance with the CMA’s leniency programme, it has secured immunity from fines.

The CMA’s case against the businesses relates to 14 contracts with a variety of customers, ranging from a City law firm to a further education college. The identities of the customers have not been published. Usually in competition cases, it is to be expected that customers will have been overcharged as a result of the anti-competitive conduct. Following a CMA announcement of this sort, it is commonplace for customers to seek damages for the amount they have been overcharged. Presumably the customers in question in this case will give thought to that possibility – perhaps particularly so the (unidentified) City law firm that the CMA says has been a victim of the collusion in this case.

This latest announcement by the CMA is a reminder that it continues to crack down on cartel and other anti-competitive behaviour across a range of sectors. All businesses should be alert to the risks they face if they are found to infringe competition law and should take appropriate steps to ensure they are compliant.

Shoosmiths’ experienced and highly-regarded competition law team is well-versed in working with businesses to help them achieve compliance with competition law. Contact us if you would like further details of the services that we offer.