Water cooler and triangular chairs.

CAT sheathes its claws after final construction appeals

28 April 2011

The Competition Appeal Tribunal (CAT) has now handed down its judgment in respect of the final three cases in appeals brought by 25 construction companies against fines levied by the OFT.

The final three appeals deal with issues of liability and resulted in two companies (GMI Construction and A H Willis & Sons) succeeding in setting aside the OFT decision in its entirety, whilst a third (North Midland Construction) succeeded in setting aside the OFT's decision in respect of one infringement and significantly reducing the penalty in another from over £1.5m to just £300,000.

As I mentioned in my previous blog of 22 March and subsequent comment of 19 April, the 25 cases appealed accounted for around £76m of the total fines of just under £130m imposed by the OFT on 103 construction companies in its decision of September 2009.  The final tally shows that from penalties totalling just over £82m, the CAT has upheld total fines of only £4.4m.

The CAT was particularly critical of:

  • The starting point set by the OFT in respect of many of the infringements (despite accepting that the OFT had been operating within its own published fining Guidelines);
  • The use of a mechanistic approach to adopt a minimum deterrence threshold based on global group turnover of any infringing parties; and
  • The use of evidence contained in interview transcripts of one party to allege infringements by another company, even where such statements were reviewed and attested by the original interviewee.

Given the breadth and depth of the OFT's reversal it seems inevitable that it will be forced to look again at its fining policy and the Guidelines that underpin it.  However, bearing in mind the Government's current wide ranging consultation on fundamental reforms to the UK competition regime (see my blog and article), it remains to be seen whether the OFT or its successor body will oversee the changes.

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