The dramatic reduction in six cover pricing fines imposed by the Office of Fair Trading has raised questions over the watchdog’s approach.
Gillian Sproul, head of Mayer Brown’s London Competition group and representative for John Sisk and Sisk Group, said today’s ruling proved the OFT’s approach was wrong.
John Sisk & Son Ltd and Sicon Ltd saw its fine slashed from £6.1m to just over £350,000 as the size of six appeallants’ fines was slashed by the Competition Appeal Tribunal.
Ms Sproul said: “The tribunal’s judgment puts a huge question mark over the OFT’s approach to calculating penalties and especially the extra deterrence factor the OFT can add to a basic fine.
“It is crystal clear from the CAT’s judgment that the OFT’s one-size-fits-all approach to deterrence in this case was wholly wrong.
“In this case, it did not give enough weight to the low margins in the construction industry. It also lost sight of the balance between a company’s culpability and the need to deter it and other companies from the same activities in future. It needs to stand back and take a long hard look at the penalty before finalising it.”
Kier released a statement to the Stock Exchange confirming its fine had been reduced from £17.9m to £1.7m.
It added: “Kier fully endorses competition law and, in 2007, began the implementation of a comprehensive compliance programme which has been firmly embedded throughout the business.”
Stephen Ratcliffe, director of the UKCG, said: “The outcomes of these appeals are matters for the individual companies involved. However, it is now time to move on.
“The competition law infringements which were investigated arise from an historic practice in the industry. It has been established by the OFT and the tribunal that giving or taking cover prices is unlawful and could result in severe financial penalties for companies, as well as sanctions for individuals.
“UKCG will continue to work to ensure that competition law compliance remains high on the agenda in the construction industry and, in particular, that the principles continue to be promoted throughout the construction supply chain.”