RMC bears brunt as concrete cartels receive record fines

TOM STEVENSON

Deputy City Editor

A fair trading court has imposed record fines totalling pounds 8.4m on some of Britain's largest building companies for price-fixing and market-sharing agreements. Hardest hit was RMC, which was fined pounds 3.85m. Others found guilty of operating cartels included Tarmac, Redland and ARC, part of Hanson.

Mr Justice Buckley, president of the Restrictive Practices Court in London, said the fines were significantly higher than the court had imposed in the past. The cartels had constituted serious anti-competitive activity by leading companies in the industry whose objective had been to distort the market and fix prices.

He said: "Such behaviour is intolerable. This blatant disregard of court orders strikes at the rule of law and public interest".

The findings of the court close a long-running scandal which brought to light endemic restrictive practices in the ready-mixed concrete industry. Analysts close to the business admit that business was carved up for years by local managers behind closed doors.

Heavy building materials, because of the high cost of transport, tend to operate extremely localised markets in which a small number of companies have high market shares. They are particularly prone to the activities of cartels.

Five directors of the companies had earlier pleaded guilty to, or been found guilty of, aiding and abetting contempt of court by their companies. They were fined a total of pounds 87,500.

Mr Justice Buckley added: "If individuals are ever again brought before this court for such blatant disregard of court orders on anything like such a scale, they can expect to go to prison for a significant period."

All the companies admitted breaches of undertakings given to, or orders made by, the court in 1978/79 that they would not be involved in secret price-fixing and market-sharing agreements.

The Office of Fair Trading gave evidence that the agreements had re- started almost immediately after the undertakings had been given, had continued for about 10 years and that there was knowledge of this at a high level in the companies. The cartels had operated in the North-west, East Anglia, East Midlands, London and the South-east.

The OFT's investigation started again in the late Eighties after tip- offs from former employees. The companies denied the allegations initially but admitted in 1990 that widespread cartel activity had taken place.

Jeffrey Preston, Director General of Fair Trading, said: "The fines justify the OFT's persistence in this long-running action." A spokesman for RMC said: "RMC unhesitatingly condemns such unlawful arrangements."