Five concrete firms face £4bn fine

Earlier this month, European Commission officials raided UK and European offices of Holcim, Cemex, Lafarge, and Heidelberg - as well as Dyckerhoff in Germany - on suspicion of illegal cartel activity.

If the firms are found guilty, they could be fined up to 10 per cent of their combined worldwide turnover, about £4 billion.

Three of the five firms being investigated - Dyckerhoff, Heidelberg, and Lafarge - have been fined previously.

In 1994, the European Commission fined cement companies - including Lafarge - for operating a cartel, dividing up cement markets and sharing information.

German authorities also fined cement companies 660 million euros in 2003 for cartel activity, while the EU fined Lafarge 250 million euros in 2002 for its part in a plasterboard cartel.

Cartel law specialist John Cassels, of Field Fisher Waterhouse, said that, if found guilty, the companies could be hit with fines at least as large as those imposed last week on car glass manufacturers - a total of £1.2 billion.

Mr Cassels said: “If the current raids result in finding that there has been a cartel, Dyckerhoff, Heidelberg, and Lafarge will be repeat offenders and could face very significant fines, easily as big as the car glass fines.

“Fines could run as high as 10 per cent of group turnover.”

He added: “Those that buy cement from companies that are found to have been engaged in a cartel are also likely to bring actions for damages to recoup losses.

“Directors of companies found to be involved in cartels can be sent to prison. In a recent case, three directors were prosecuted by the Office of Fair Trading and sentenced to three years each in prison.”

With the cement industry already under pressure due to the economic downturn, the fines could put some companies close to bankruptcy.

But Mr Cassels said: “It has never been found to be a good defence to say a fine will make a company bankrupt.

“It is much better to co-operate. If so leniency will be shown and fines reduced.”

The European Commission runs a leniency programme whereby the first member of a cartel that comes forward with relevant information can gain total immunity from fines.

Mr Cassels said: “Whistle-blowers can get complete immunity from prosecution because it’s hard enough to discover cartels. Companies that come forward with information can get a significant reduction in their fine.”

The European Commission said: “We have reason to believe that the companies concerned may have violated EC Treaty antitrust rules that prohibit cartels and restrictive business practices and/or abuse of a dominant market position.”

All of the firms involved told Construction News they were co-operating fully with the Commission’s investigation.

There are currently two other investigations of construction industry cartels being carried out by the Office of Fair Trading in the UK.

In April this year, the OFT formally alleged 112 construction firms were engaged in bid rigging having probed thousands of tenders for construction work covering schools, hospitals and private sector developments. In total, £3 billion worth of tenders were affected.

Last month, the OFT launched an investigation into eight recruitment firms following allegations regarding fixing the rates of workers supplied to construction sites in the UK.

How to cut risk of cartels

John Cassels of law firm Field Fisher Waterhouse offers advice
Reducing cartel risks

• Take care with language in all communications – careless use of language can cast suspicion on legitimate discussions

• Leave any meeting if anti-competitive discussions start – also, agree an agenda for any meeting where a rival company is present and keep detailed notes of all meetings with competitors

• Remember all internal documents will be scrutinised including diaries and personal notebooks in an investigation. This it is not limited to papers: computer records, emails and tape recordings are also under scrutiny

• Conceding or destroying incriminating evidence only makes things worse – and do not use guilty vocabulary such as ‘delete after reading’ or ‘destroy’

What to do if raided?

• Do not refuse admission to officials or be obstructive

• Do not attempt to hide, shred or delete any records or materials, and do not create any new documents relating to the investigation

• Immediately notify your in-house legal department or external legal advisors

• Ensure all investigating officials are accompanied or assisted by members of staff at all times

• Consider a temporary block on all external emails

• Do not volunteer any more information than you’re asked for

• Keep a record of questions and answers