CMA secures further director ban in demolition cover-bidding probe

Another director has been banned for their part in the cover-bidding scandal that has rocked the demolition sector.

Nicholas Brown, managing director of the Brown and Mason Group, has signed an undertaking not to serve as a company director for seven years after authorising “compensation payments” in relation to two incidents of cover-bidding, according to the Competition and Markets Authority (CMA).

The competition regulator said Brown took the voluntary undertaking after it “put him on formal notice of its intention to apply to the court for a disqualification order against him”.

In a statement published yesterday (25 May), the CMA said: “Nicholas Brown has admitted being personally involved in two breaches of competition law affecting contracts for demolition services with a total value of over £30m, including one relating to the Shell Building on London’s Southbank, and the other relating to the Lots Road Power Station in London.”

The CMA said “compensation payments” with an aggregate value of £700,000 (excluding VAT) were paid to Brown and Mason by two competitors in return for its participation in the anti-competitive agreements. Brown was a director of Brown and Mason – but not  its managing director – at the time of the incidents.

The disqualification is the latest action by the CMA, which in March fined 10 companies a combined £59.3m “for illegally colluding to rig bids for demolition and asbestos removal contracts involving both public and private sector projects”.

At the time it also successfully secured disqualification agreements from Michael Cantillon, former director of Cantillon (seven years and six months) and David Darsey, former director of Erith (five years and 10 months).

In its latest statement, the CMA said: “Mr Brown has admitted taking a ‘central role’ in this conduct, including by instructing staff to collect the payments by issuing invoices relating to ‘fictional services and goods’ that were not in fact ever supplied by Brown and Mason.

“Mr Brown further acknowledged that, as a shareholder in Brown and Mason, he stood to benefit personally from these payments, and that he understood at the time that his conduct was wrong.”

In his disqualification undertaking, Brown said: “As a result of my actions… I caused Brown and Mason to engage in conduct which created conditions of competition which did not correspond to the normal conditions of the market.

“I understood at the time that my conduct was wrong. Furthermore, it is clear to me now, and should have been clear to me at the time, given my position as an experienced director, that such interactions between competitors to agree cover bids, fix elements of tender prices and receive compensation payments carried unacceptable risks of infringing competition law.”

The CMA also revealed that Brown’s seven-year ban would have been shorter if he had cooperated earlier with its probe.

It said: “Nicholas Brown did not offer an undertaking until after the CMA put him on formal notice of its intention to apply to the court for a disqualification order against him. Had he given an undertaking before the CMA issued the formal notice, his period of disqualification would not have been as long.”

Brown is now disqualified from being a director of a company, or otherwise being involved in the management of any UK company, for seven years unless he gets court permission.

CMA executive director of enforcement Michael Grenfell said: “Company directors need to take personal responsibility for ensuring that their companies comply with competition law.

“People and businesses need to be protected from illegal anti-competitive practices. Company directors who fall short can expect to face the prospect of disqualification.”