CMA probe - The blast and the fallout

On Friday 24 June 2022, the Competition and Markets Authority (CMA) dropped a bomb on the UK demolition industry.??

Even though it was the culmination (for now) of a cartel-busting investigation that has been running for more than three years and which has been public knowledge for almost as long, the bomb came as something of a surprise; the CMA having assured everyone that no update would be forthcoming until July.

Regardless of the timing, its impact was immediate and potentially devastating.??Caught up in the initial blast are eight demolition contractors – each of them members of the National Federation of Demolition Contractors – that have admitted their involvement in at least one instance of bid rigging between January 2013 and June 2018: Brown and Mason, Cantillon, Clifford Devlin, DSM, John F Hunt, Keltbray, McGee, and Scudder.??Two other NFDC members - Erith Group and Squibb Group - have not admitted their involvement in any bid rigging.??The CMA says it should not be assumed that they have broken the law.

Within minutes of the CMA announcement, the once good name of most of the demolition industry was being dragged through the media mud as the blast zone widened.??The UK demolition industry has not made so many TV and newspaper headlines since February 2016 and the death of four demolition workers at the Didcot A Power Station.

But while the eight companies that have admitted guilt await their fate and a potential second blast aftershock with the imposition of potentially mammoth financial penalties, the wider demolition industry will be more focused upon the likely fallout from the initial explosion.

The first to feel the effects should be the National Federation of Demolition Contractors which counts all 10 companies implicated in the investigation among its membership.??

Prior to the COVID-19 pandemic, estimates suggested that there was between 550 and 600 demolition companies active in the UK.??The NFDC has a membership of around 145 corporate members.??The fact that the NFDC accounts for around 25 percent of all demolition companies but 100 percent of all those implicated in the CMA investigation should surely raise further questions.??

Furthermore, the companies named include those of two NFDC honorary life Vice Presidents, one of them the immediate past president.

The Federation issued a hollow statement that spoke of codes of conduct but that made no mention of reprimand or sanction for those that have brought the industry into disrepute.??As if the optics were not already bad enough, it is worth noting that the NFDC will soon be packing its buckets and spades before heading to – of all places – Monte Carlo for its annual convention.??Regardless of whether those mired in the CMA probe will be in attendance, this will surely be seen as the NFDC thumbing its nose at the authorities while it seeks to preserve its membership.

If the National Federation of Demolition Contractors truly wishes to be the arbiter of all that is good within the UK demolition business, then it should call for the immediate expulsion or resignation of all those companies implicated in the CMA investigation.??Failure to do so further tarnishes the Federation’s already tainted reputation and the reputation of member companies that are innocent of any wrongdoing.

Social media is already filled with industry wags suggesting that the letters NFDC now stand for National Federation of Demolition Colluders.??That will not be forgotten any time soon, and it will live long in the memory of those responsible for procuring demolition services.

While we wait – probably in vain – for the NFDC to react in a meaningful way, the wider demolition industry will be engulfed by the dust cloud kicked up by that initial blast.

Even those that did not fall under the CMA’s gaze will now find themselves facing even greater scrutiny.??Contractors with a squeaky-clean track record will be greeted with caution and even suspicion rather than the respect that their experience and expertise previously demanded.

As a respected demolition man said to me on Friday afternoon:?“The CMA investigation has put the reputation of the UK demolition industry back 30 years”.??It is hard to argue with that sentiment.

It is virtually impossible to place a positive spin on this situation, particularly for those contractors and trade bodies that have taken the full force of the CMA blast.

But there is a faint light at the end of this especially long and dark tunnel.??For one thing, those companies that have operated in the shadow of the larger companies implicated in the CMA investigation now have a chance to shine.??The stench of collusion will stick to any contractors that are ultimately prosecuted and fined and they will likely find it more difficult to make it onto tender lists.??That could work to the advantage of those superb companies that have been kept waiting in the industry wings.

And there is another potential positive.??The industry now has an opportunity to start afresh; to make sweeping changes; to tear down established structures and practices; and to create a transparent post-CMA industry of which we can all once again be proud.??

It will not be easy and any such suggestion will be met with resistance from the industry’s old guard; the same old guard that was at the helm when the alleged price fixing was taking place; the same old guard that remains in place while the industry’s reputation is picked over like so much carrion.

The demolition sector has the opportunity to build back better; to reform and renew; and to create a sector that is befitting of the modern age.??But it will never do so employing the systems, procedures, structures and people that led us unwittingly to this watershed moment in the industry’s history.

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Mark Anthony is the founder of DemolitionNews.com.