The CMA Files - Revisited
On 23 March 2023, the CMA handed down fines totalling almost £60 million to 10 members of the NFDC. in the two years since, precious little has changed.
Two years ago yesterday, the Competition and Markets Authority announced the outcome of its probe into bid rigging, cover pricing and collusion within the UK demolition sector.
We’ll get to the scale of the penalties and the 10 NFDC member companies that received them in just a moment. But it is worth remembering back to that day two years ago.
The announcement, when it came, actually felt like a blessed relief. The CMA investigation had hung over the industry like the sword of Damocles for more than four years; a dark shadow that weighed down upon the guilty, the innocent, and the investigated but exonerated.
In an exclusive interview with DemolitionNews back in October 2019, just six months after the investigation officially began, the then NFDC CEO Howard Button summed up the mood of the Federation.
“The investigation could jeopardise the whole Federation and the whole industry. I am dreading it. In our history, we have banned only one or two companies that I can remember, but never for anything like this. This is not even in our current rules and articles of association. I don’t think it would break us, but it would put us on very dodgy ground.”
At the time of that interview, it was clear the expulsion of members caught up in the investigation was very much under consideration.
But in the three and a half years that followed, while the guilty companies were making provisions for the financial penalties they would ultimately face, the NFDC had time to reconsider any such expulsions. In fact, in that three and a half year period, the NFDC had time to deploy its deflector shields and apply a veneer of Teflon to ensure that nothing stuck to the Federation, even though all ten of the companies implicated were NFDC members at the time of the offences.
As you’re about to hear, when the magnitude of the penalties was announced, the news landed like a nuclear bomb. But while the blast was loud and widespread, the fallout had seemingly been contained long before the mushroom cloud rose above the industry.
On 23 March 2023, the CMA handed down fines totalling almost £60 million to 10 members of the National Federation of Demolition Contractors.
The magnitude of those fines was unprecedented in the UK demolition sector.
Brown and Mason was fined £2.4 million. Cantillon was fined £1.9 million. Clifford Devlin was fined £423,000. DSM received a fine of £1.4 million. John F Hunt was fined £5.6 million; McGee was fined £3.7 million; Scudder was fined £8.2 million and Squibb Group was fined £2.0 million.
The two largest fines went to Erith Group, which was fined £17.5 million, and Keltbray, which was initially fined £16 million; but this was later raised to £18 million after an unsuccessful appeal.
The fines were the culmination of a four-year investigation into collusion, bid-rigging and cover pricing that covered a multitude of significant demolition and asbestos removal contracts in London and the Midlands.
Those contracts included: Bow Street Magistrates Court and Police station, the Metropolitan Police training centre, Selfridges, Oxford University, and shopping centres in Reading and Taplow.
In addition to the fines, the CMA secured director bans against one director from Erith Group, one director from Brown and Mason, and two directors from Cantillon. Those bans totalled 24 years.
Corruption, collusion and greed had been laid bare; and some of the biggest names of the sector were implicated.
The repercussions were going to be huge. This would turn the UK demolition sector on its head. It would redraw the top tier of the industry, spark a radical shift towards greater transparency and honesty; and it was going to have a massive impact upon each of the guilty parties and, quite possibly, on the innocent too.
Or so we thought.
The response – or the lack thereof – was immediate.
The handing down of the £60 million coincided with the arrival of a new president of the National Federation of Demolition Contractors. In fact, his inauguration was largely overshadowed by 10 of his member companies bringing the Federation and the wider industry into disrepute.
It was, therefore, an opportunity for a new president to truly make his mark; to take a bold stance against corruption within the industry. That stance never came.
There were no sanctions; no punishments; and – most telling of all – no expulsions. Despite concerns that such inaction would result in all NFDC members being tarred with the same brush, that lack of response was to set the tone. And the Federation’s credibility has suffered ever since.
There was a degree of fallout, of course. The Scudder name disappeared from the demolition world, and it was absorbed into parent company, Careys.
Squibb Group folded, although the CMA investigation had precious little to do with its untimely demise. Neither company is now on the NFDC roster.
The story for the other eight companies, however, has been almost universally more upbeat.
Brown and Mason shuffled the corporate deck and, as of the latest filings with Companies House, the firm has seen its profits quadruple, while its profit margins saw a sixfold increase.
Cantillon was acquired by the Morrisroe Group and the Cantillon name was dropped.
Clifford Devlin saw its losses widen, according to the latest reporting from Building magazine back in 2023.
The 2024 financial results from DSM saw a sharp fall in both turnover and profit; but the company remains one of the most profitable demolition companies in the UK.
Erith made an initial loss following the CMA fines. But the company bounced back into the black the following year
Earlier this year, John F Hunt reported that its turnover had increased from £67 million in 2023 to £89.2 million in 2024, generating a pre-tax profit of £1.5 million that was up slightly on the £1.3 million reported in the previous year.
Keltbray, recipient of the CMA’s biggest fine reported a 30 percent surge in turnover during 2023. At the same time, the company saw its order book top the £1.0 billion mark (although it is worth noting that this is not all demolition related).
Meanwhile, McGee saw its turnover shoot up by an astonishing 46 percent. Income rose to £122 million in the year ending 30 November 2023 compared to £83 million for the previous 12 months, while its profit increased by nearly 90 percent from £5.2 to £9.9 million.
It is worth noting that all of this took place against a background of reduced workloads and increased competition that has characterised the UK demolition sector for the past few years.
Several of the CMA 10 have switched to employee ownership either just before or immediately after the fines were handed down.
But, in the main, most of the companies found guilty of bid-rigging, collusion and cover pricing have shaken off the impact of the fines.
Meanwhile, the market has been remarkably – if unsurprisingly – forgiving of their infractions.
What is most notable, however, is the forgiveness of one specific part of the market.
A number of the projects named in the CMA investigation were effectively Government-backed projects, funded from the public purse.
Surely an investigation by a Government-backed body into corruption on Government-backed contracts would have resulted in greater caution within that same Government?
You would think so, wouldn’t you. But no.
The Crown Commercial Service recently named the 13 companies that have been welcomed onto its demolition framework. And that list contains some very familiar names: DSM, Erith, Keltbray and McGee. Careys, which absorbed Scudder, is also on the list.
Five companies fined for their part in the CMA scandal have been approved by a Government agency less than two years later. That’s more than a third of the entire framework.
Two years ago, the CMA’s investigation exposed widespread corruption and led to record fines that should have shaken the UK demolition sector to its very core. The industry braced for consequences: accountability, reform, and a radical shift towards honesty, transparency, and integrity.
Instead, the fallout has been underwhelming. Those involved regrouped, rebranded, and, in many cases, thrived.
The trade body of which they were all a member barely flinched as they and the industry they claim to serve was brought into disrepute.
Even the Government, the very body that funded some of the tainted contracts, has displayed remarkable amnesia, welcoming multiple fined companies onto its demolition framework and into its bosom.
Far from a reckoning, this has been a lesson in resilience; not for the industry’s ethics, but for its ability to weather scandal with minimal consequence. The Government, the NFDC and the market has spoken, and the message is clear: when it comes to demolition, business as usual trumps accountability.