Is the CMA’s intended leniency on housebuilders’ cartel behaviour another consequence of the “growth at all costs” mantra?

In a response to evidence of illegal cartel behaviour by seven of the UK’s major house builders, the UK’s Competition and Markets Authority (CMA) proposes voluntary commitments from the firms not to break the law again, and to pay £100 million into a fund to support affordable housing programmes.

The CMA’s investigation found evidence that Barratt Redrow, Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey, and Vistry have been sharing competitively sensitive information that affect the price of homes. 

Sharing competitively sensitive information is a “hard core” breach of competition law. This type of cartel behaviour is considered the most damaging form of anti-competitive conduct and therefore attracts some of the highest fines and penalties on the individuals involved. Competition authorities, like the CMA, have the powers to not only impose hefty fines, but also by holding individuals to account through director disqualification powers.

The proposed resolution means that the CMA will stop the investigation and will not proceed to a decision on whether the companies broke the law. Nor will the companies have to admit liability (which is the usual practice if this were dealt with as a cartel settlement process where an admission of liability is required for a speedier resolution of the case and a lower fine). 

The £100 million payment to a fund is a small fraction of a potential fine if they had been found guilty of cartel behaviour. It is not yet clear how much of the £100 million will find its way back to these companies given that they are likely to be involved in the provision of affordable homes programmes. The buyers who may have paid inflated prices for houses would gain nothing from this proposal.

Weakening deterrent from illegal business practice that is anti-competitive harms the public interest and only increases the growth of big business profit margins.