The sting in the CMA tail
A new legal claim against one of the companies fined by the Competition and Markets Authority could spark a feeding frenzy among developers.
Quite why it has taken more than two years, I have no idea. Maybe if your company has a market capitalisation of almost £11 billion, the recovery of a trifling £2.4 million is something you do when you have some spare time on your hands; when you are bored; a mere bagatelle.
But the news that Hong Kong-based developer Circadian Limited has launched a legal action against Carey Group will have sent shockwaves through the UK demolition industry this morning.
Circadian alleges that it was overcharged to the tune of £2.4 million for demolition work in 2014 at its scheme to redevelop Lots Road Power Station in west London. This project was one of a number of contracts in which the Competition and Markets Authority uncovered evidence of bid rigging, collusion and cover pricing. That CMA probe resulted in fines totalling more than £60 million for ten National Federation of Demolition Contractors member companies, including Scudder which has since been absorbed into the Carey Group.
If the Circadian bid is successful and it it recovers some or all of the money it claims to have been overcharged, it could trigger a feeding frenzy among other developers whose projects were also among those probed by the CMA. Although one of the original CMA 10 - Squibb Group - has since folded, there will be another eight high profile UK demolition contractors looking nervously over their shoulders today.
At the same time, this latest revelation once again calls into question the recent appointment of five of the guilty companies - including Carey Group - onto a Government-run Crown Commercial Service demolition framework. After all, Government-funded projects were also among those revealed by the CMA to have been won in questionable circumstances. If the Circadian bid is successful, could the Government or local authorities pursue similar claims? Would the Crown Commercial Service be forced to seek substitute companies for its demolition framework? At this juncture, it is impossible to tell. It took Circadian two years to raise this initial claim; it could take two (or more) for others to smell blood in the water and to respond accordingly.
One (or two) things are certain for now. The CMA saga - a four-year investigation plus two more years of apparent silent inaction - is far from over. And maybe those that apparently hoped that the whole thing would just blow over might now be regretting their decision to impose no sanctions against those that brought the industry into disrepute in 2023, and who now look set to continue doing so.
This could run and run.