Efforts to root out illegal cartels have stepped up with bigger rewards for anonymous whistleblowers.
The Competition and Markets Authority (CMA) is offering up to £250,000 for information on corrupt firms in industries like construction.
It comes after 10 firms were fined £60 million for illegally rigging bids for demolition and asbestos removal contracts involving both public and private sector projects.
Several directors involved in the unlawful conduct were also disqualified.
Cartels are businesses which cheat customers by agreeing not to compete, to keep prices high.
As well as stifling competition, it prevents other businesses from getting a fair deal.
Cartels often go to great lengths to keep their dealings hidden, making them difficult to detect.
Penalties
Businesses found to have been involved in illegal cartels can be fined up to 10% of their annual turnover.
Individuals directly involved can face up to five years in prison.
Company directors can be disqualified from holding director positions for up to 15 years.
Businesses or individuals that have participated in a cartel may escape sanctions if they come forward with information about the cartel, provided certain conditions are met.
The CMA has increased its reward to witnesses of unlawful cartel activity from £100,000 to £250,000 to encourage people to come forward.
Wider industry corruption
The construction industry was recently found to be the sector most vulnerable to fraud and corruption, in an extensive investigation by the Home Office of 5,000 firms across seven sectors.
It found the sector was the “least likely” to have preventative measures in place to guard against corruption and fraud. These include:
- IT security
- Internal and external audits
- Surveillance
- Anti-fraud/anti-corruption policies
- Countermeasure training for staff
- Extra vetting/screening of staff
- Whistleblowing policies
Further, the survey found construction businesses were “more likely” to see people being “unfairly favoured” in business dealings.
And businesses were also the “most likely to perceive corruption as common or very common”.
The average annual cost of corruption per construction business across the three years to 2020 was £58,000.
“The CMA’s job is to stamp out illegal cartels, but because cartels are generally conducted in secret, we need to encourage people to come forward and provide us with the information we need to crack down on cartels and protect people and businesses from the harm they cause,” said Michael Grenfell, executive director of enforcement at the CMA. “For these reasons, we are increasing the maximum financial reward for informants and whistleblowers who provide us with valuable information about cartels so that we can take action.”
To report cartel activity you have witnessed, email cartelshotline@cma.gov.uk or call 0800 085 1664/020 3738 6888.
To confess your involvement in a cartel and apply for leniency, or for confidential guidance, call 020 3738 6833.
The CMA’s Cheating or Competing campaign has advice to help spot, report and deter these illegal practices.
Guidance on competition law can be found here.
Enjoyed this? Try Construction sector ‘most vulnerable’ to fraud – while corruption rife
Get industry news in 5 minutes!
A daily email that makes industry news enjoyable. It’s completely free.