Further action by the CMA: Construction Director Disqualifications
You may recall from our previous update back in November 2020 (CMA hand out multi-million-pound fines to construction firms) that the Competition and Markets Authority (CMA) is currently paying particular attention to tackling anti-competition in the construction industry, having made an example of two of the largest suppliers of rolled lead and investigating the merger between Breedon and Cemex, among many others.
The CMA has recently turned its attention to obtaining director disqualifications following such investigations.
On 23 October 2019, the CMA announced that it had fined FP McCann Ltd, Stanton Bonna Concrete Limited and CPM Group Limited a total of £36 million for engaging in a price-fixing and market sharing cartel between 2006 and 2013 in relation to the supply of precast concrete drainage products (see CMA press release here). Such products are of course of vital importance to large infrastructure projects across the UK.
Under the Company Directors Disqualification Act, the CMA has the power to apply to the court to disqualify a director from holding company directorships or performing certain roles in relation to a company for a specified period, if a company which he or she is a director of has breached competition law. The Act also allows the CMA to accept a disqualification undertaking from a director instead of bringing proceedings, which has the same legal effect as a disqualification order.
Mr Eoin McCann and Mr Francis McCann were directors of FP McCann during the entire period in which the infringing conduct took place and attended regular cartel meetings on its behalf. The CMA has managed to secure undertakings by which Mr Eoin McCann will be disqualified for 12 years and Mr Francis McCann for 11 years, from 31 March 2021. These are the longest periods for director disqualification secured by the CMA to date, reflecting the serious nature of the infringement and the extent of the directors’ involvement in the cartel.
The CMA has similarly accepted disqualification undertakings from Mr Philip Michael Stacey and Mr Robert James Taylor Smillie, who were directors of CPM Group throughout the same period, for 7.5 years and 6.5 years respectively.
The CMA has now secured a total of 25 director disqualifications following competition investigations and will not hesitate to seek further disqualifications if appropriate. Construction companies, and their directors, are therefore put on notice of the many risks arising from such arrangements.
If you would like any further information regarding competition law or our expertise in the construction sector, please do get in touch.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. For advice, get in touch with your usual Greenwoods GRM contact or scroll down to complete our enquiry form.