Erith Group has posted a pre-tax loss of £13.8m after being fined earlier this year by the Competition and Markets Authority (CMA) for its involvement in historic illegal tendering activities.
In the year to the end of September 2022, the demolition contractor’s turnover was £208m, up 18.6% on the previous year.
However, the company posted a pre-tax loss of £13.8m, a significant drop from its £11.3m profit in 2021.
The company, based in Erith, Kent, would have remained in the black but for the £17.6m fine. imposed by the CMA in March. Erith, along with nine other demolition contractors, were found to have colluded with competitors when they submitted bids for work on 19 projects with a combined value of more than £150m.
At the time, the CMA said the 10 contractors “agree[ed] on prices through illegal cartel agreements when bids were submitted in competitive tenders for the contracts,” adding: “These bids were manipulated, misleading the customer that they were competitive when they were not.”
Erith’s fine was the largest of the 10 imposed. Unlike eight of the companies involved, Erith did not admit its involvement in the scandal and therefore did not have its fine reduced.
Erith’s latest accounts have recorded the full value of the fine, although the contractor has only paid £8.6m of it when the accounts were closed on June 30. The company has agreed to pay the remaining £9 million in installments over the next four years.
The firm said that despite the fine, “the group’s forward position is strong”, supported by a “solid” workbook.
In a director’s report, Erith chairman Steve Darsey said that since the CMA’s finding of breaches of competition law, “they only affect one company within the [Erith] group”, calculating the fine based on the turnover of the whole group is “unfair and disproportionate”.
The CMA did not specify which company in the Erith group had been involved in bid-rigging, but the fines were directed at Erith Contractors Ltd and Erith Holdings Ltd. It added that the companies were “entities that are the economic successor or parent companies of those directly involved in the conduct”.
Darsey also said the group had “put in place robust new systems” that make it “impossible for further breaches of competition law to occur”, with the company creating a new compliance platform and appointing a compliance manager who reports directly to the board.
Darsey added that he sees the future with “cautious optimism” and that, due to the strong order book, the group “expects to maintain the current level of turnover”.
Earlier this year, Erith’s former managing director David Darsey, who is also a former president of the National Federation of Demolition Contractors, was disqualified from being a director for five years and 10 months after admitting taking part in cover price fixing.
