The Competition and Markets Authority has set out further details of a current investigation into a cartel amongst a number of companies who manufacture galvanised steel tanks.

The tanks are used for water storage in larger buildings, such as schools, hospitals and other commercial and public buildings, and supply the water used in fire sprinkler systems.

Previously, in a settlement announced in March 2016, 3 of the 5 suppliers - Franklin Hodge Industries Ltd, Galglass Ltd and KW Supplies Ltd (as economic successor to Kondea Water Supplies Ltd) - admitted to having agreed with each other, and with a fourth supplier, CST Industries (UK) Ltd, to share the market between them, to fix prices and to rig bids for contracts between 2005 and 2012. The aim of these actions was to improve profit margins on the tanks by avoiding customers being able to ‘play’ the competitors off against each other. The companies have now agreed to pay fines totalling more than £2.6 million.

CST Industries (UK) Ltd, which brought the arrangements to the authorities’ attention, will, as a result, benefit from immunity from fines under the CMA leniency policy, provided that it continues to co-operate and complies with the other conditions of the CMA’s leniency policy. Franklin Hodge also received a discount under the leniency policy for co-operating with the investigation.

In a separate allegation, the CMA has also provisionally concluded that some of the suppliers exchanged competitively-sensitive pricing information at (or shortly after) a meeting in July 2012.

This concerned 3 of the suppliers involved in the main cartel arrangement who admitted this conduct as part of the settlement announced in March (Franklin Hodge Industries Ltd, Galglass Ltd and KW Supplies Ltd), plus another supplier, Balmoral Tanks Ltd.

Stephen Blake, Senior Director of the CMA’s Cartels and Criminal Group, said:

“Strong competition between businesses has clear benefits for customers, who benefit from lower prices, better quality and more choice. Any weakening of competition that maintains or increases prices will ultimately be at the expense of consumers or tax payers.”

“In March, we announced a settlement with the participants in the main cartel and the issue of today’s statement represents the next stage in the process.”

“The information exchange allegation against the non-settling party, Balmoral, will be considered by a new case decision group, which will hear any representations Balmoral may wish to make. No conclusion should be drawn that Balmoral has infringed competition law pending the outcome of that process.”

The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers anti-competitive agreements and concerted practices between businesses which have as their object or effect the prevention, restriction or distortion of competition within the UK.

Article 101 of the Treaty on the Functioning of the European Union (TFEU), covers equivalent agreements or practices which may affect trade between EU Member States. Any business found to have infringed the prohibitions in the Competition Act 1998 or the TFEU can be fined up to 10% of its annual worldwide group turnover.

Stephen Blake added:

“Any company that is approached to join a cartel or other anti-competitive conduct or arrangement should immediately and unequivocally reject the approach and avoid participation in any discussions that may involve the sharing of confidential and competitively sensitive pricing information.”

The CMA currently has 13 Competition Act investigations open.