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CAT rules on parent company liability, evidence of infringement and penalty in bid rigging appeal

25/03/11

On 22 March 2011, the Competition Appeal Tribunal ("CAT") handed down judgment on an appeal brought by Durkan Holdings Limited, Durkan Pudelek Limited, and Durkan Limited against the OFT's decision on bid rigging in the construction industry dated 21 September 2009 (the "Decision").

In the Decision, the OFT found that Durkan Pudelek had committed two infringements of the Competition Act 1998, one involving cover pricing (where one bidder agrees with another to submit a price for a contract that is not intended actually to win the contract) and one involving a compensation payment (where one bidder compensates another for the costs incurred in submitting a tender that proved unsuccessful). The OFT held Durkan Holdings jointly and severally liable in respect of these infringements on the basis that it had exercised decisive influence over Durkan Pudelek at the material time and therefore the two companies formed part of a single "undertaking" for the purposes of the Chapter I Prohibition.

The OFT also found that Durkan Limited had committed an infringement by supplying a cover price to a competitor.

In total, the OFT imposed a penalty of £6,720,551 on Durkan in relation to these infringements.

In its judgment on Durkan's appeal, the CAT held that (i) the OFT had correctly found that Durkan Holdings exercised decisive influence over Durkan Pudelek and therefore it was entitled to impose joint and several liability in respect of the latter company's infringements, (ii) the OFT had failed to show to the requisite standard that Durkan Limited had supplied a cover price, and (iii) the OFT had erred in calculating the level of penalty, in particular by using the last business year prior to the Decision for determining relevant turnover rather than the last business year prior to the end of the infringement.

Accordingly, the CAT concluded that the total penalty imposed upon Durkan should be reduced to £2,436,000.

The judgment is here.

Mark Hoskins QC appeared on behalf of Durkan.

Kelyn Bacon and Tony Singla appeared on behalf of the OFT.