Apex Asphalt And Paving Co Ltd v Office Of Fair Trading [2005] CAT 4 (24 February 2005) [2005] CAT 4

"(1) … agreements between undertakings, decisions by associations of undertakings or concerted practices which – (a) may affect trade within the United Kingdom, and (b) have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom,are prohibited … (2) Subsection (1) applies, in particular, to agreements, decisions or practices which – (a) directly or indirectly fix purchase or selling prices or any other trading conditions …"

"3.- (1) The Tribunal must determine the appeal on the merits by reference to the grounds of appeal set out in the notice of appeal. (2) The Tribunal may confirm or set aside the decision which is the subject of the appeal, or any part of it, and may- (a) remit the matter to the OFT (b) impose or revoke, or vary the amount of, a penalty, … (d) give such directions, or take such other steps, as the OFT could itself have given or taken, or (e) make any other decision which the OFT could itself have made. (3) Any decision of the Tribunal on an appeal has the same effect, and may be enforced in the same manner, as a decision of the OFT. (4) If the Tribunal confirms the decision which is the subject of the appeal it may nevertheless set aside any finding of fact on which the decision was based."

"(2) At any time when the court determines a question arising under this Part, it must act (so far as is compatible with the provisions of this Part and whether or not it would otherwise be required to do so) with a view to securing that there is no inconsistency between- (a) the principles applied, and decision reached, by the court in determining that question; and (b) the principles laid down by the Treaty and the European Court, and any relevant decision of that Court, as applicable at that time in determining any corresponding question arising in Community law. (3) The court must, in addition, have regard to any relevant decision or statement of the [European] Commission."

"I write to confirm our conversation this afternoon in relation to the OFT's allegations that Apex was involved in an infringement of the Chapter I prohibition in the Dudley schools contracts discussed in the Rule 14 Notice served on Apex. OFT's allegations as to Apex's involvement in the Dudley Schools contracts are set out in detail in the evidence, analysis and findings contained in paragraphs 273 to 299 of the Rule 14 Notice. Thus, although the summary table of infringements by party in the Rule 14 did not list Apex's name next to the Dudley Schools contracts, OFT considers that its (OFT's) allegations relating to Apex's involvement in those Dudley contracts are nevertheless clear from the Rule 14. In the circumstances, however, although Apex did not make written representations in relation to the Dudley Schools contracts by the closing date for written representations, OFT is prepared to give Apex a further 10 days from today's date to make written representations on those contracts. Please therefore send any representations that Apex wishes to make in relation to the Dudley Schools contracts to us by 5pm on Thursday 11 December 2003."

"Thank you for your email, the contents of which we note. As discussed, Apex did not comment in its response on the evidence relating to the Dudley Schools contracts as it appeared from paras 331 et seq of the Rule 14 Notice that the OFT did not propose to make a decision against Apex in relation to those contracts. In order to allow Apex a reasonable time to consider the evidence and the position in relation to these contracts and to prepare a response with any representations, we would like to request a little more time until 5.00 pm on Monday 22 December. Please confirm that this is in order. This has a knock-on effect in relation to the dates for the oral hearing as clearly it would be best if this was fixed to take place a little time after the submission of the further representations. Would you be able to put forward some further alternative dates?"

"We have considered your request for an extension of the additional time that the OFT has granted Apex to make representations on the Dudley Schools contracts until 5pm on Monday 22 December 2003. We are unable to accede to your request. As I stated in my email of 27 November 2003, we consider that it was clear from the Rule 14 Notice as a whole that that OFT did intend to make a decision against Apex in relation to the Dudley Schools contracts and that the proper time to have made representations on those contracts was by the closing date that the OFT set for written representations on the Rule 14 Notice, i.e. November 2003. Although OFT is, as I stated in my last email to you, prepared to give Apex extra time to make representations on the Dudley Schools contracts, we are unable to extend this time until 22 December. We are hearing oral representations from the parties in the above case before Christmas and the list of possible dates that I have already given you for oral hearings are the dates that remain available. Nevertheless, we are prepared to extend the time for the submission of written representations on the Dudley Schools contracts by a shorter period, until 12 pm (midday) on 18 December 2003. As you noted, the extension of time for these written representations may have a knock-on effect on the date on which Apex will make written representations. In that context we note that while OFT normally considers that oral representations are an opportunity to expand upon written representations, there is no reason why Apex – if it wished to do so – could not make its oral representations on the Dudley Schools contracts before it has sent in its written representations on those contracts and after those oral representations send in its written representations on those contracts (although in any event by 18 December 2003). That said, the OFT is prepared to offer Apex one additional date to make oral representations: 10 am to 12 pm on Friday 19 December 2003."

"2.1. Apex drew a distinction between being removed from a list of approved contractors which a tendering authority had and not being invited to tender in future as a result of not returning a bid following an invitation to tender. Apex accepts that simply failing to respond to an invitation to tender alone is unlikely to result in a company being removed from the list of approved tenders. However, given the necessary discretion which local authority officers have in sending out invitations, there is a very real risk that future invitations will not be extended to a party which does not lodge bids when invited to do so. As set out in our previous submissions (17 November §§5.6-5.10; 18 December §§5.2-5.8), this is as much a matter of common sense as evidence: if a person invited to bid does not respond it is of disadvantage to the person inviting tenders since they receive fewer; it may, in extreme circumstances, require the inviting authority to follow special processes for appointment which are inconvenient and expensive; and it may be read as a lack of interest in a type of work or work in a particular area on the part of the invitee. Certainly, all these factors operate as a disincentive to invite a company to tender again. 2.2. Staff at Apex have had conversations with Local Authority officers about the practice of informally 'suspending' a contractor for the failure to submit a tender on previous occasions. However, by their nature, such conversations tend to be 'off the record' and Apex does not believe those it has spoken to would be willing to provide evidence. 2.3. However, Apex believes that its understanding of the business is well accepted in the industry. Indeed, a number of authorities make it very clear on their invitations to tender that failure to submit a tender could have significant repercussions for the invitee. Attached as examples are the following very recent letters inviting tenders: …"

" Frankley and Harborne Hill Schools Analysis of evidence 188. Fax dated 30 August from Apex to Briggs (see paragraph 61 above). This fax header sheet with handwritten script on it notes, "[…] [C] THESE ARE YOUR FIGURES INCLUSIVE OF CONTINGENCIES FOR TWO PROJECTS WITH BIRM C.C. FRANKLEY = £193460.40 HARBORNE HILL = £144910.10…" (Emphasis added).

" DUDLEY SCHOOLS CONTRACTS Hob Green, Wollescote, Christchurch and Church of the Ascension Schools Analysis of evidence 329. Fax from John Roper at Howard Evans to Tony at Solihull . This undated fax states the following: "…YOUR PRICE INCLUDING PROVISIONAL SUMS AND CONTINGENCIES. CHRISTCHURCH AND CHURCH OF THE ASCENSION SCHOOL £172,320 + VAT HOB GREEN AND WOLLESCOTE SCHOOLS £291,822.00 + VAT…" 330. The OFT considers that there is no legitimate reason for Howard Evans to send Solihull, or any other undertaking involved in these contracts, a fax with prices relating to these contracts. The OFT considers that, together, the words in the quotation above in a fax sent by Howard Evans to Solihull indicate that Howard Evans told Solihull the price that Solihull should bid for the Christchurch and Church of the Ascension schools contract and for the Hob Green and Wollescote schools contract rather than Solihull independently determining its own price for the contracts. 331. Fax from John Roper at Howard Evans to […][ C ] at Apex . This undated fax states the following: "…YOUR PRICE INCLUDING PROVISIONAL SUMS AND CONTINGENCIES. CHRISTCHURCH AND CHURCH OF THE ASCENSION SCHOOLS £166,518 + VAT HOB GREEN AND WOLLESCOTE SCHOOLS £283,101.00 + VAT…" 332. The OFT considers that, together, the words in the quotation above in a fax sent by Howard Evans to Apex indicate that Howard Evans told Apex the price that Apex should bid for the Christchurch and Church of the Ascension schools contract and for the Hob Green and Wollescote schools contract rather than Apex independently determining their own price for the contracts. 333. Interview with Mr G of Howard Evans, dated 3 September 2002 . As noted at paragraph 122 above, Mr G was asked by an OFT official who interviewed him a number of questions about documents found by OFT officials on a section 28 visit to Howard Evans's premises. In relation to the faxes quoted at paragraphs 329 and 331 above, Mr G stated, "

"112. Dudley Property Consultancy ("

"365. Section 2(1) of the Act prohibits, inter alia, "agreements between undertakings…or concerted practices which…have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom"

"374. The evidence set out at Part I of this Decision formed the basis of the Rule 14 Notice sent to the Parties. The OFT's assessment of the views set out in the Parties' representations to the OFT is set out in Part II of this Decision. Having considered carefully the evidence and analysed the views set out in the Parties' representations, the OFT finds that there were agreements or concerted practices between the participants in each contract particularised in Part II above to fix the prices of the supply of certain RMI services by collusive tendering in relation to the contracts particularised in Part II above. 375. On the basis of the evidence available, set out at paragraphs 157 to 358 above, the OFT has calculated the relevant duration for each of the infringements for the Parties. The table below shows the Parties to each infringement and that, in relation to each infringement to which this Decision applies, the duration of each infringement has been calculated by the OFT as less than a year. INFRINGEMENT PARTICIPANTS DURATION OF INFIRNGEMENT … Frankley and Harborne Hill Schools • Briggs • Apex August 2001 to October 2001 … Hob Green, Wollescote, Christchurch and Church of the Ascension Schools • Howard Evans • Solihull • Apex General Asphalte March 2002 to April 2002 …"

"378. Section 36(1) of the Act provides that, on making a Decision that an agreement has infringed the Chapter I prohibition, the OFT may require a party to the agreement to pay it a penalty in respect of the infringement. No penalty which has been fixed by the OFT may exceed 10% of the turnover of the undertaking calculated in accordance with the provisions of the Competition Act (Determination of Turnover for Penalties Order) 2000 ('the Penalties Order'). The OFT considers that the parties to each infringing agreement or concerted practice are as set out in the OFT's conclusions in relation to each infringement, set out in the OFT's analysis at paragraphs 157 to 358 above. 379. The OFT may impose a penalty on an undertaking that has infringed the Chapter I prohibition only if it is satisfied that the infringement has been committed intentionally or negligently but is under no obligation to determine specifically whether there was intention or negligence. 380. In the instant case, in relation to the local authority contracts, the Parties were required to certify that they created their tender figures on their own rather than in conjunction with another person. For the private contracts, the OFT considers that the Parties would in all likelihood have made tender applications before and either would have, or ought to have been, aware that the purpose of conducting tenders is to ensure competition in the award of contracts. The OFT considers that, in the light of these facts, the Parties could not have been unaware that the agreements or concerted practices to which they were party had the object of preventing, restricting or distorting competition. Moreover, the OFT considers that the very nature of the agreements or concerted practices was such that the Parties could not have been unaware that they had the object of preventing, restricting or distorting competition. The OFT is therefore satisfied that the Parties intentionally or negligently infringed the Chapter I prohibition. … 383. In accordance with section 38(8) of the Act, the OFT must have regard to the guidance on penalties issued under section 38(1) of the Act when setting the amount of the penalty. Step 1 - starting point 384. The starting point for determining the level of penalty is calculated by applying a percentage rate to the 'relevant turnover' of an undertaking, up to a maximum of 10%. The 'relevant turnover' is the turnover of the undertaking in the relevant product market and relevant geographic market affected by the infringement in the last financial year. To be consistent with the Penalties Order, the OFT considers that the last financial year is the business year preceding the date when the infringement ended. 385. The actual percentage rate which is applied to the relevant turnover depends upon the nature of the infringement. The more serious the infringement, the higher the likely percentage rate. When making its assessment, the OFT will also consider a number of other factors, including the nature of the product, the structure of the market, the market share(s) of the undertaking(s) involved in the infringement, entry conditions and the effect on competitors and third parties. The damage caused to consumers whether directly or indirectly will also be an important consideration. An assessment of the appropriate starting point is carried out for each of the undertakings concerned, in order to take account of the real impact of the infringing activity of each undertaking on competition. 386. The OFT has imposed a penalty on the Parties. The starting point for each penalty is based on the fact that the agreements or concerted practices in this case are related to collusive tendering. Collusive tendering is a form of price-fixing and is one of the most serious infringements of the Chapter I prohibition. The usual starting point for each penalty in such a case is likely to be at or near 10% of relevant turnover. Nature of product 387. RMI services for flat roofs in the West Midlands area are 'industrial' services sold to local authorities, private managing agents, architects or surveyors. Flat roofs are one of a number of available types of roof but because of a basic difference in materials and technology, purchasers that need RMI services carried out on flat roofs have no substitute to employing the services of a contractor that can carry out that kind of work in relation to flat roofs. Structure of market 388. The market consists of those contractors able to supply RMI services for flat roofs in the West Midlands. As noted at paragraph 14 above, there is a high degree of fragmentation in the roofing contracting industry as a whole with some 74% of companies commanding a turnover of less than £250,000 in 2002. The flat roofing market in the West Midlands is therefore likely to be fragmented. Local authorities are significant purchasers of the RMI services for flat roofs that the Parties supply. Many of the Parties told the OFT that there was perceived pressure in the industry for suppliers to put in tender bids even when suppliers did not wish to win the contract because otherwise there was the risk of not being invited to tender in the future. Market share of undertakings involved and entry conditions 389. Although detailed statistical data about the market for RMI services of flat roofs specifically is unavailable, the OFT considers the fact that the roofing market as a whole is so fragmented (see paragraph 388 above) suggests that none of the Parties has a leading market share in the market for RMI services for flat roofs (although it should be noted that Briggs is, in the roofing market as a whole, a leading player). Personnel to work in the roofing industry are scarce, so it would be hard for new players to enter the market. 390. The Parties identified in the Decision constitute a not insignificant part of suppliers of RMI services for flat roofs in the West Midlands area. Also, the Parties have made representations that 'cover pricing' in the sense used in this Decision (see paragraph 18 above) is a widely-encountered phenomenon in the roofing industry. The Parties' infringements gave purchasers of flat-roofing services the impression that there was more competition in the tender process relating to a specific contract than there actually was. However, the OFT notes that the instances of cover pricing dealt with in this Decision are individual, discrete infringements. The OFT considers that such infringements are not the most serious examples of collusive tendering. [Emphasis in the original] 391. The OFT considers that a more serious example of collusive tendering would be cartels where collusion in relation to individual contracts was part of a single overall scheme that was centrally controlled and orchestrated by the participants with contracts allocated between members of the cartel. Equally, the OFT considers that cartels where participants made inducements to other cartel participants to persuade them to submit false bids in order to make substantial financial gains from their activities are more serious than the type of collusive tendering in which the Parties were involved. 392. The OFT has had regard to the nature of the product, the structure of the market, the market share of the Parties, market entry conditions and the effect of the infringements on competitors and third parties, as set out in paragraphs 387 to 391 above. On the basis that the market is fragmented (see paragraph 388 above) and none of the Parties has a leading market share (see paragraph 389 above), and the fact that the Parties' infringements were - by virtue of the fact that they were individual, discrete infringements - not the most serious examples of collusive tendering, the OFT has fixed a starting point of […][ C ]% of relevant turnover for all the Parties. Step 2 - adjustment for duration 393. The starting point may be adjusted to take into account the duration of the infringement for infringements which last for more than one year. As noted at paragraph 375 above, the duration of each of the infringements in this Decision are calculated by the OFT to be less than a year. The OFT does not therefore adjust any of the penalties in this case for duration. Step 3 – adjustment for other factors … Step 4 – adjustment for further aggravating or mitigating factors … Step 5 – adjustment to prevent the maximum penalty from being exceeded and to avoid double jeopardy …"

" Step 1 - starting point 398. Apex was involved in two infringements: collusive tendering in connection with the Frankley and Harborne Hill contracts – which the OFT considers came to an end in October 2001 – and collusive tendering in connection with the Dudley schools contracts – which the OFT has found came to an end in April 2002. Apex's financial year is 1 February to 31 January and so these contracts were in two financial years. As noted at paragraph 396 above, where an undertaking has been involved in multiple infringements that occurred in more than one financial year, the OFT has used the relevant turnover that relates to the first infringement in time as the basis for the starting point. In relation to the Frankley and Harborne Hill contracts (Apex's first infringement in time), Apex's turnover in the relevant product and geographic markets in the business year preceding the date when the infringement ended (1 February 2000 to 31 January 2001) was £[…][ C ]. 399. The OFT has made an analysis of its findings regarding the seriousness of this infringement at paragraphs 387 to 392 above and fixed the starting point for all the Parties at […][ C ]% of relevant turnover. The starting point for Apex is therefore £[…][ C ]. Step 2 – adjustment for duration 400. In accordance with paragraph 393 above, the OFT does not make any adjustment for duration. …"

"(1) In respect of the FHH Contracts: There was not strong and compelling evidence that there was either an unlawful agreement or a concerted practice between Briggs and Apex in relation to the FHH Contracts. (2) In respect of the Dudley Contracts: (a) The Respondent was not entitled to impose a fine on Apex in respect of the infringement in circumstances where it had not indicated in its Rule 14 Notice that it proposed to take any action in respect of the alleged infringement; (b) Further and in any event, on the evidence relied upon by the Respondent there was not strong and compelling evidence that there was either an unlawful agreement or a concerted practice between Apex and Howard Evans (and others) in relation to the Dudley Contracts. (3) Alternatively, the Respondent has failed adequately to set out the reasons for its Decision in respect of either the FHH and/or Dudley Contracts. (4) Further and in any event, in respect of the level of the fine imposed, the Respondent failed to take into account the absence of any impact upon consumers of the infringements found and in doing so imposed too great a fine upon Apex."

"(1) The Tribunal must determine the appeal on the merits by reference to the grounds of appeal set out in the notice of appeal. (2) The Tribunal may confirm or set aside the decision which is the subject of the appeal, or any part of it, and may- (a) remit the matter to the Director, (b) impose or revoke, or vary the amount of, a penalty, … (e) make any other decision which the Director could himself have made. (3) Any decision of the Tribunal on an appeal has the same effect, and may be enforced in the same manner, as a decision of the Director. (4) If the Tribunal confirms the decision which is the subject of the appeal it may nevertheless set aside any finding of fact on which the decision was based."

"105. …under domestic law the standard of proof we must apply in deciding whether infringements of the Chapter I or Chapter II prohibitions are proved is the civil standard, commonly known as the preponderance or balance of probabilities, notwithstanding that the civil penalties imposed may be intended by the Director to have a deterrent effect. … 108. Since cases under the Act involving penalties are serious matters, it follows from Re H that strong and convincing evidence will be required before infringements of the Chapter I and Chapter II prohibitions can be found to be proved, even to the civil standard. Indeed, whether we are, in technical terms, applying a civil standard on the basis of strong and convincing evidence, or a criminal standard of beyond reasonable doubt, we think in practice the result is likely to be the same. We find it difficult to imagine, for example, this Tribunal upholding a penalty if there were a reasonable doubt in our minds, or if we were anything less than sure that the Decision was soundly based. 109. …It is for the Director to satisfy us in each case, on the basis of strong and compelling evidence, taking account of the seriousness of what is alleged, that the infringement is duly proved, the undertaking being entitled to the presumption of innocence, and to any reasonable doubt there may be."

"(1) … agreements between undertakings, decisions by associations of undertakings or concerted practices which – (a) may affect trade within the United Kingdom, and (b) have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom,are prohibited … (2) Subsection (1) applies, in particular, to agreements, decisions or practices which – (a) directly or indirectly fix purchase or selling prices or any other trading conditions …"

"3.- (1) The Tribunal must determine the appeal on the merits by reference to the grounds of appeal set out in the notice of appeal. (2) The Tribunal may confirm or set aside the decision which is the subject of the appeal, or any part of it, and may- (a) remit the matter to the OFT (b) impose or revoke, or vary the amount of, a penalty, … (d) give such directions, or take such other steps, as the OFT could itself have given or taken, or (e) make any other decision which the OFT could itself have made. (3) Any decision of the Tribunal on an appeal has the same effect, and may be enforced in the same manner, as a decision of the OFT. (4) If the Tribunal confirms the decision which is the subject of the appeal it may nevertheless set aside any finding of fact on which the decision was based."

"(2) At any time when the court determines a question arising under this Part, it must act (so far as is compatible with the provisions of this Part and whether or not it would otherwise be required to do so) with a view to securing that there is no inconsistency between- (a) the principles applied, and decision reached, by the court in determining that question; and (b) the principles laid down by the Treaty and the European Court, and any relevant decision of that Court, as applicable at that time in determining any corresponding question arising in Community law. (3) The court must, in addition, have regard to any relevant decision or statement of the [European] Commission."

"I write to confirm our conversation this afternoon in relation to the OFT's allegations that Apex was involved in an infringement of the Chapter I prohibition in the Dudley schools contracts discussed in the Rule 14 Notice served on Apex. OFT's allegations as to Apex's involvement in the Dudley Schools contracts are set out in detail in the evidence, analysis and findings contained in paragraphs 273 to 299 of the Rule 14 Notice. Thus, although the summary table of infringements by party in the Rule 14 did not list Apex's name next to the Dudley Schools contracts, OFT considers that its (OFT's) allegations relating to Apex's involvement in those Dudley contracts are nevertheless clear from the Rule 14. In the circumstances, however, although Apex did not make written representations in relation to the Dudley Schools contracts by the closing date for written representations, OFT is prepared to give Apex a further 10 days from today's date to make written representations on those contracts. Please therefore send any representations that Apex wishes to make in relation to the Dudley Schools contracts to us by 5pm on Thursday 11 December 2003."

"Thank you for your email, the contents of which we note. As discussed, Apex did not comment in its response on the evidence relating to the Dudley Schools contracts as it appeared from paras 331 et seq of the Rule 14 Notice that the OFT did not propose to make a decision against Apex in relation to those contracts. In order to allow Apex a reasonable time to consider the evidence and the position in relation to these contracts and to prepare a response with any representations, we would like to request a little more time until 5.00 pm on Monday 22 December. Please confirm that this is in order. This has a knock-on effect in relation to the dates for the oral hearing as clearly it would be best if this was fixed to take place a little time after the submission of the further representations. Would you be able to put forward some further alternative dates?"

"We have considered your request for an extension of the additional time that the OFT has granted Apex to make representations on the Dudley Schools contracts until 5pm on Monday 22 December 2003. We are unable to accede to your request. As I stated in my email of 27 November 2003, we consider that it was clear from the Rule 14 Notice as a whole that that OFT did intend to make a decision against Apex in relation to the Dudley Schools contracts and that the proper time to have made representations on those contracts was by the closing date that the OFT set for written representations on the Rule 14 Notice, i.e. November 2003. Although OFT is, as I stated in my last email to you, prepared to give Apex extra time to make representations on the Dudley Schools contracts, we are unable to extend this time until 22 December. We are hearing oral representations from the parties in the above case before Christmas and the list of possible dates that I have already given you for oral hearings are the dates that remain available. Nevertheless, we are prepared to extend the time for the submission of written representations on the Dudley Schools contracts by a shorter period, until 12 pm (midday) on 18 December 2003. As you noted, the extension of time for these written representations may have a knock-on effect on the date on which Apex will make written representations. In that context we note that while OFT normally considers that oral representations are an opportunity to expand upon written representations, there is no reason why Apex – if it wished to do so – could not make its oral representations on the Dudley Schools contracts before it has sent in its written representations on those contracts and after those oral representations send in its written representations on those contracts (although in any event by 18 December 2003). That said, the OFT is prepared to offer Apex one additional date to make oral representations: 10 am to 12 pm on Friday 19 December 2003."

"2.1. Apex drew a distinction between being removed from a list of approved contractors which a tendering authority had and not being invited to tender in future as a result of not returning a bid following an invitation to tender. Apex accepts that simply failing to respond to an invitation to tender alone is unlikely to result in a company being removed from the list of approved tenders. However, given the necessary discretion which local authority officers have in sending out invitations, there is a very real risk that future invitations will not be extended to a party which does not lodge bids when invited to do so. As set out in our previous submissions (17 November §§5.6-5.10; 18 December §§5.2-5.8), this is as much a matter of common sense as evidence: if a person invited to bid does not respond it is of disadvantage to the person inviting tenders since they receive fewer; it may, in extreme circumstances, require the inviting authority to follow special processes for appointment which are inconvenient and expensive; and it may be read as a lack of interest in a type of work or work in a particular area on the part of the invitee. Certainly, all these factors operate as a disincentive to invite a company to tender again. 2.2. Staff at Apex have had conversations with Local Authority officers about the practice of informally 'suspending' a contractor for the failure to submit a tender on previous occasions. However, by their nature, such conversations tend to be 'off the record' and Apex does not believe those it has spoken to would be willing to provide evidence. 2.3. However, Apex believes that its understanding of the business is well accepted in the industry. Indeed, a number of authorities make it very clear on their invitations to tender that failure to submit a tender could have significant repercussions for the invitee. Attached as examples are the following very recent letters inviting tenders: …"

" Frankley and Harborne Hill Schools Analysis of evidence 188. Fax dated 30 August from Apex to Briggs (see paragraph 61 above). This fax header sheet with handwritten script on it notes, "[…] [C] THESE ARE YOUR FIGURES INCLUSIVE OF CONTINGENCIES FOR TWO PROJECTS WITH BIRM C.C. FRANKLEY = £193460.40 HARBORNE HILL = £144910.10…" (Emphasis added).

" DUDLEY SCHOOLS CONTRACTS Hob Green, Wollescote, Christchurch and Church of the Ascension Schools Analysis of evidence 329. Fax from John Roper at Howard Evans to Tony at Solihull . This undated fax states the following: "…YOUR PRICE INCLUDING PROVISIONAL SUMS AND CONTINGENCIES. CHRISTCHURCH AND CHURCH OF THE ASCENSION SCHOOL £172,320 + VAT HOB GREEN AND WOLLESCOTE SCHOOLS £291,822.00 + VAT…" 330. The OFT considers that there is no legitimate reason for Howard Evans to send Solihull, or any other undertaking involved in these contracts, a fax with prices relating to these contracts. The OFT considers that, together, the words in the quotation above in a fax sent by Howard Evans to Solihull indicate that Howard Evans told Solihull the price that Solihull should bid for the Christchurch and Church of the Ascension schools contract and for the Hob Green and Wollescote schools contract rather than Solihull independently determining its own price for the contracts. 331. Fax from John Roper at Howard Evans to […][ C ] at Apex . This undated fax states the following: "…YOUR PRICE INCLUDING PROVISIONAL SUMS AND CONTINGENCIES. CHRISTCHURCH AND CHURCH OF THE ASCENSION SCHOOLS £166,518 + VAT HOB GREEN AND WOLLESCOTE SCHOOLS £283,101.00 + VAT…" 332. The OFT considers that, together, the words in the quotation above in a fax sent by Howard Evans to Apex indicate that Howard Evans told Apex the price that Apex should bid for the Christchurch and Church of the Ascension schools contract and for the Hob Green and Wollescote schools contract rather than Apex independently determining their own price for the contracts. 333. Interview with Mr G of Howard Evans, dated 3 September 2002 . As noted at paragraph 122 above, Mr G was asked by an OFT official who interviewed him a number of questions about documents found by OFT officials on a section 28 visit to Howard Evans's premises. In relation to the faxes quoted at paragraphs 329 and 331 above, Mr G stated, "

"112. Dudley Property Consultancy ("

"365. Section 2(1) of the Act prohibits, inter alia, "agreements between undertakings…or concerted practices which…have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom"

"374. The evidence set out at Part I of this Decision formed the basis of the Rule 14 Notice sent to the Parties. The OFT's assessment of the views set out in the Parties' representations to the OFT is set out in Part II of this Decision. Having considered carefully the evidence and analysed the views set out in the Parties' representations, the OFT finds that there were agreements or concerted practices between the participants in each contract particularised in Part II above to fix the prices of the supply of certain RMI services by collusive tendering in relation to the contracts particularised in Part II above. 375. On the basis of the evidence available, set out at paragraphs 157 to 358 above, the OFT has calculated the relevant duration for each of the infringements for the Parties. The table below shows the Parties to each infringement and that, in relation to each infringement to which this Decision applies, the duration of each infringement has been calculated by the OFT as less than a year. INFRINGEMENT PARTICIPANTS DURATION OF INFIRNGEMENT … Frankley and Harborne Hill Schools • Briggs • Apex August 2001 to October 2001 … Hob Green, Wollescote, Christchurch and Church of the Ascension Schools • Howard Evans • Solihull • Apex General Asphalte March 2002 to April 2002 …"

"378. Section 36(1) of the Act provides that, on making a Decision that an agreement has infringed the Chapter I prohibition, the OFT may require a party to the agreement to pay it a penalty in respect of the infringement. No penalty which has been fixed by the OFT may exceed 10% of the turnover of the undertaking calculated in accordance with the provisions of the Competition Act (Determination of Turnover for Penalties Order) 2000 ('the Penalties Order'). The OFT considers that the parties to each infringing agreement or concerted practice are as set out in the OFT's conclusions in relation to each infringement, set out in the OFT's analysis at paragraphs 157 to 358 above. 379. The OFT may impose a penalty on an undertaking that has infringed the Chapter I prohibition only if it is satisfied that the infringement has been committed intentionally or negligently but is under no obligation to determine specifically whether there was intention or negligence. 380. In the instant case, in relation to the local authority contracts, the Parties were required to certify that they created their tender figures on their own rather than in conjunction with another person. For the private contracts, the OFT considers that the Parties would in all likelihood have made tender applications before and either would have, or ought to have been, aware that the purpose of conducting tenders is to ensure competition in the award of contracts. The OFT considers that, in the light of these facts, the Parties could not have been unaware that the agreements or concerted practices to which they were party had the object of preventing, restricting or distorting competition. Moreover, the OFT considers that the very nature of the agreements or concerted practices was such that the Parties could not have been unaware that they had the object of preventing, restricting or distorting competition. The OFT is therefore satisfied that the Parties intentionally or negligently infringed the Chapter I prohibition. … 383. In accordance with section 38(8) of the Act, the OFT must have regard to the guidance on penalties issued under section 38(1) of the Act when setting the amount of the penalty. Step 1 - starting point 384. The starting point for determining the level of penalty is calculated by applying a percentage rate to the 'relevant turnover' of an undertaking, up to a maximum of 10%. The 'relevant turnover' is the turnover of the undertaking in the relevant product market and relevant geographic market affected by the infringement in the last financial year. To be consistent with the Penalties Order, the OFT considers that the last financial year is the business year preceding the date when the infringement ended. 385. The actual percentage rate which is applied to the relevant turnover depends upon the nature of the infringement. The more serious the infringement, the higher the likely percentage rate. When making its assessment, the OFT will also consider a number of other factors, including the nature of the product, the structure of the market, the market share(s) of the undertaking(s) involved in the infringement, entry conditions and the effect on competitors and third parties. The damage caused to consumers whether directly or indirectly will also be an important consideration. An assessment of the appropriate starting point is carried out for each of the undertakings concerned, in order to take account of the real impact of the infringing activity of each undertaking on competition. 386. The OFT has imposed a penalty on the Parties. The starting point for each penalty is based on the fact that the agreements or concerted practices in this case are related to collusive tendering. Collusive tendering is a form of price-fixing and is one of the most serious infringements of the Chapter I prohibition. The usual starting point for each penalty in such a case is likely to be at or near 10% of relevant turnover. Nature of product 387. RMI services for flat roofs in the West Midlands area are 'industrial' services sold to local authorities, private managing agents, architects or surveyors. Flat roofs are one of a number of available types of roof but because of a basic difference in materials and technology, purchasers that need RMI services carried out on flat roofs have no substitute to employing the services of a contractor that can carry out that kind of work in relation to flat roofs. Structure of market 388. The market consists of those contractors able to supply RMI services for flat roofs in the West Midlands. As noted at paragraph 14 above, there is a high degree of fragmentation in the roofing contracting industry as a whole with some 74% of companies commanding a turnover of less than £250,000 in 2002. The flat roofing market in the West Midlands is therefore likely to be fragmented. Local authorities are significant purchasers of the RMI services for flat roofs that the Parties supply. Many of the Parties told the OFT that there was perceived pressure in the industry for suppliers to put in tender bids even when suppliers did not wish to win the contract because otherwise there was the risk of not being invited to tender in the future. Market share of undertakings involved and entry conditions 389. Although detailed statistical data about the market for RMI services of flat roofs specifically is unavailable, the OFT considers the fact that the roofing market as a whole is so fragmented (see paragraph 388 above) suggests that none of the Parties has a leading market share in the market for RMI services for flat roofs (although it should be noted that Briggs is, in the roofing market as a whole, a leading player). Personnel to work in the roofing industry are scarce, so it would be hard for new players to enter the market. 390. The Parties identified in the Decision constitute a not insignificant part of suppliers of RMI services for flat roofs in the West Midlands area. Also, the Parties have made representations that 'cover pricing' in the sense used in this Decision (see paragraph 18 above) is a widely-encountered phenomenon in the roofing industry. The Parties' infringements gave purchasers of flat-roofing services the impression that there was more competition in the tender process relating to a specific contract than there actually was. However, the OFT notes that the instances of cover pricing dealt with in this Decision are individual, discrete infringements. The OFT considers that such infringements are not the most serious examples of collusive tendering. [Emphasis in the original] 391. The OFT considers that a more serious example of collusive tendering would be cartels where collusion in relation to individual contracts was part of a single overall scheme that was centrally controlled and orchestrated by the participants with contracts allocated between members of the cartel. Equally, the OFT considers that cartels where participants made inducements to other cartel participants to persuade them to submit false bids in order to make substantial financial gains from their activities are more serious than the type of collusive tendering in which the Parties were involved. 392. The OFT has had regard to the nature of the product, the structure of the market, the market share of the Parties, market entry conditions and the effect of the infringements on competitors and third parties, as set out in paragraphs 387 to 391 above. On the basis that the market is fragmented (see paragraph 388 above) and none of the Parties has a leading market share (see paragraph 389 above), and the fact that the Parties' infringements were - by virtue of the fact that they were individual, discrete infringements - not the most serious examples of collusive tendering, the OFT has fixed a starting point of […][ C ]% of relevant turnover for all the Parties. Step 2 - adjustment for duration 393. The starting point may be adjusted to take into account the duration of the infringement for infringements which last for more than one year. As noted at paragraph 375 above, the duration of each of the infringements in this Decision are calculated by the OFT to be less than a year. The OFT does not therefore adjust any of the penalties in this case for duration. Step 3 – adjustment for other factors … Step 4 – adjustment for further aggravating or mitigating factors … Step 5 – adjustment to prevent the maximum penalty from being exceeded and to avoid double jeopardy …"

" Step 1 - starting point 398. Apex was involved in two infringements: collusive tendering in connection with the Frankley and Harborne Hill contracts – which the OFT considers came to an end in October 2001 – and collusive tendering in connection with the Dudley schools contracts – which the OFT has found came to an end in April 2002. Apex's financial year is 1 February to 31 January and so these contracts were in two financial years. As noted at paragraph 396 above, where an undertaking has been involved in multiple infringements that occurred in more than one financial year, the OFT has used the relevant turnover that relates to the first infringement in time as the basis for the starting point. In relation to the Frankley and Harborne Hill contracts (Apex's first infringement in time), Apex's turnover in the relevant product and geographic markets in the business year preceding the date when the infringement ended (1 February 2000 to 31 January 2001) was £[…][ C ]. 399. The OFT has made an analysis of its findings regarding the seriousness of this infringement at paragraphs 387 to 392 above and fixed the starting point for all the Parties at […][ C ]% of relevant turnover. The starting point for Apex is therefore £[…][ C ]. Step 2 – adjustment for duration 400. In accordance with paragraph 393 above, the OFT does not make any adjustment for duration. …"

"(1) In respect of the FHH Contracts: There was not strong and compelling evidence that there was either an unlawful agreement or a concerted practice between Briggs and Apex in relation to the FHH Contracts. (2) In respect of the Dudley Contracts: (a) The Respondent was not entitled to impose a fine on Apex in respect of the infringement in circumstances where it had not indicated in its Rule 14 Notice that it proposed to take any action in respect of the alleged infringement; (b) Further and in any event, on the evidence relied upon by the Respondent there was not strong and compelling evidence that there was either an unlawful agreement or a concerted practice between Apex and Howard Evans (and others) in relation to the Dudley Contracts. (3) Alternatively, the Respondent has failed adequately to set out the reasons for its Decision in respect of either the FHH and/or Dudley Contracts. (4) Further and in any event, in respect of the level of the fine imposed, the Respondent failed to take into account the absence of any impact upon consumers of the infringements found and in doing so imposed too great a fine upon Apex."

"(1) The Tribunal must determine the appeal on the merits by reference to the grounds of appeal set out in the notice of appeal. (2) The Tribunal may confirm or set aside the decision which is the subject of the appeal, or any part of it, and may- (a) remit the matter to the Director, (b) impose or revoke, or vary the amount of, a penalty, … (e) make any other decision which the Director could himself have made. (3) Any decision of the Tribunal on an appeal has the same effect, and may be enforced in the same manner, as a decision of the Director. (4) If the Tribunal confirms the decision which is the subject of the appeal it may nevertheless set aside any finding of fact on which the decision was based."

"105. …under domestic law the standard of proof we must apply in deciding whether infringements of the Chapter I or Chapter II prohibitions are proved is the civil standard, commonly known as the preponderance or balance of probabilities, notwithstanding that the civil penalties imposed may be intended by the Director to have a deterrent effect. … 108. Since cases under the Act involving penalties are serious matters, it follows from Re H that strong and convincing evidence will be required before infringements of the Chapter I and Chapter II prohibitions can be found to be proved, even to the civil standard. Indeed, whether we are, in technical terms, applying a civil standard on the basis of strong and convincing evidence, or a criminal standard of beyond reasonable doubt, we think in practice the result is likely to be the same. We find it difficult to imagine, for example, this Tribunal upholding a penalty if there were a reasonable doubt in our minds, or if we were anything less than sure that the Decision was soundly based. 109. …It is for the Director to satisfy us in each case, on the basis of strong and compelling evidence, taking account of the seriousness of what is alleged, that the infringement is duly proved, the undertaking being entitled to the presumption of innocence, and to any reasonable doubt there may be."

"142. It is settled case-law that the statement of objections must set forth clearly all the essential facts upon which the Commission is relying at that stage of the procedure. The essential procedural safeguard which the statement of objections constitutes is an application of the fundamental principle of Community law which requires the right to a fair hearing to be observed in all proceedings (Joined Cases 100/80 to 103/80 Musique Diffusion Française and Others v Commission [1983] ECR 1825 , paragraphs 10 and 14). 143. It follows that the Commission is required to specify unequivocally, in the statement of objections, the persons on whom fines may be imposed. 144. It is clear that a statement of objections which merely identifies as the perpetrator of an infringement a collective entity, such as Cewal, does not make the companies forming that entity sufficiently aware that fines will be imposed on them individually if the infringement is made out. Contrary to what the Court of First Instance held, the fact that Cewal does not have legal personality is not relevant in this regard. 145. Similarly, a statement of objections in those terms is not sufficient to warn the companies concerned that the amount of the fines imposed will be fixed in accordance with an assessment of the participation of each company in the conduct constituting the alleged infringement."

"(i) Breach of the right to a fair hearing 173. The appellants assert that the Court of First Instance has erred in law in upholding the entitlement of the Commission to impose fines on them notwithstanding that the statement of objections only threatened to impose fines on Cewal but not on any of its members. At paragraph 232 of its judgment, that Court held as follows: 'Secondly, as regards the calculation of the fine, the Court finds that, since the conference does not have legal personality, the Commission was entitled to impose a fine on the members of Cewal, rather than on the conference itself. In this regard, it should be stressed that, in addition to Cewal, each of the members of the conference was an addressee of the statement of objections. In those circumstances and having regard to the fact that Cewal had no legal personality, the Court considers that, even if the statement of objections referred only to the possibility of imposing a fine on Cewal in respect of the abusive practices, the applicants could not have been unaware that they ran the risk of a fine being imposed upon them, rather than on the conference.' 174. The appellants contend that if the Commission were not minded to impose fines on Cewal because it lacked legal personality, it should have told them that the fines would be imposed on them. They point to the following prejudice which, in their opinion, flowed from this omission: - if the fine had been imposed on Cewal it could only have been based on Cewal's turnover and not on that of its members; the former, being based solely on the Zaïrean routes, was lower than the latter; - while the fine would ultimately have been paid by the members of Cewal individually, their contributions would have been in accordance with their share in the pool; - CMB was not on notice that it would be singled out for a disproportionate share of the fine by reason of its especially active role in the abuses. The appellants conclude that the Commission failed to respect the basic requirement of a statement of objections that it inform the parties of the objections raised against them, and, in particular, as to which of them will bear the financial burden of the fine imposed. 175. The Commission does not claim that the members of Cewal were put on notice of fines but maintains that it should have been clear to the appellants 'that throughout the statement of objections, Cewal was intended to refer to the group of undertakings making up the conference', since a list of its members was annexed to the statement of objections. It also claims that the Court of First Instance was correct to hold that it would have made no sense to impose a fine on Cewal as it had no legal personality. The Commission contends that it was 'implausible that they should be 'unsophisticated' enough to be surprised by the imposition of a fine ...'. In addition, the Commission maintains that, because it was envisaged that fines would be imposed on members of Cewal in respect of the infringements of Article [81] alleged in the statement of objections, Cewal members were put on notice that individual fines would be imposed on them. 176. In my opinion, the Court of First Instance was wrong to assume that the Commission was entitled to impose a fine on the members of Cewal because Cewal lacked legal personality and because they were each addressees of the statement of objections. This error of law flows from its mistake in assuming that the applicants could not have been unaware that they ran the risk of being fined. 177. It is common case that a copy of the statement of objections was sent to the appellants, albeit only three months after it was sent to Cewal. The real issue, however, is whether the appellants were properly put on notice, by the copy of the statement of objections which they eventually received along with a cover letter which added nothing to the contents of that statement, that they could individually be subjected to fines which the statement expressly envisaged imposing only on Cewal, with all the consequences that would follow in respect of the calculation of the amount of the fines 178. In the first place, I do not find it acceptable that the Commission should make presumptions concerning such an important matter. The Court has consistently held that 'the statement of objections must set forth clearly all the essential facts upon which the Commission is relying at that stage of the procedure'. The essential procedural safeguard provided by the statement of objections is 'an application of the fundamental principle of Community law which requires the right to a fair hearing be observed in all proceedings'. Even if not criminal in nature, fines have a punitive function. It follows that the Commission has a strict obligation to notify undertakings clearly that they may be subjected to fines. … 180. Thirdly, the failure to notify the individual members of Cewal of this exposure to fines is not a merely formal defect. CMB, in particular, is in a position to point to concrete prejudice. …"

"478. The Commission imposed fines for participation in the Cembureau agreement not only on the undertakings but also on the trade associations to which the contested decision was addressed (contested decision, Article 9). It considers it necessary to fine the trade associations also 'so as to dissuade them from taking the initiative in or facilitating such restrictive agreements and practices in future' (contested decision, recital 65, paragraph 8, first indent). 479. FIC, VNC and Oficemen assert that they were not notified during the administrative procedure of the Commission's intention to impose fines on them. Such infringement of their rights of defence should lead to the annulment of Article 9 of the contested decision in their case. 480. The Court points out that the Commission is not entitled to impose a fine on an undertaking or an association of undertakings without its having previously informed the party concerned, during the administrative procedure, that it intended to do so. The [statement of objections ("

"60. However, the statement of objections must specify unequivocally the legal person on whom fines may be imposed and be addressed to that person (Case C-176/99 P ARBED v Commission [2003] ECR I-0000, paragraph 21). … 66. Equally, respect for the rights of the defence requires that the undertaking concerned must have been afforded the opportunity, during the administrative procedure, to make known its views on the truth and relevance of the facts and circumstances alleged and on the documents used by the Commission to support its claim that there has been an infringement of the Treaty (see Joined Cases 100/80 to 103/80 Musique Diffusion française and Others v Commission [1983] ECR 1825 , paragraph 10, and Case C-310/93 P BPB Industries and British Gypsum v Commission [1995] ECR I-865 , paragraph 21)."

"150. …the arguments put forward by the Commission regarding its provisional assessment of the gravity of the infringement are not very convincing. 151. In the SO, the Commission confined itself, in points 153 and 154 thereof, to stating that it intended imposing a fine, referring to the terms of Article 15(2) of Regulation No 17. It is true that it stated in the SO, in point 147, that there was a market-sharing agreement which gave rise to an appreciable restriction of competition. However, it must be pointed out that that statement does not enable it to be ascertained whether, in the Commission's view, the infringement was serious or very serious within the meaning of the Guidelines. 152. Similarly, the Commission's argument concerning the publication of the Guidelines does not carry conviction. Once again, if the Court were to consider that the publication of them were sufficient in itself to enable the addressees of a statement of objections to infer from the description of the nature of the infringement the category in which the Commission classified it, the obligation, laid down in the case-law, to give indications concerning the gravity of the infringement would serve no practical purpose (paragraph 145 above). 153. Thus, it must be concluded that in this case the SO is vitiated by a defect, in that the Commission did not indicate in the SO its provisional classification of the gravity of the infringement committed. 154. However, this finding cannot in itself give rise to annulment of the contested decision. The obligation to include in the statement of objections a brief provisional appraisal concerning the duration of the alleged infringement, its gravity and whether the infringement was committed intentionally or negligently is not an end in itself but is designed to place the addressee of the statement of objections in a position properly to defend himself (see paragraph 146, and, by analogy, Cement , paragraph 76 above, paragraph 156). 155. Thus, that obligation is inseparable from and dependent on the principle of the rights of the defence (see, by analogy, Cement , paragraph 76 above, paragraph 156, and the case-law cited therein). It is not appropriate for the Community judicature to annul Community measures on the basis of omissions in a preparatory document such as a statement of objections, which have no repercussions on the defence of the undertakings concerned. It is therefore necessary to consider whether Corus' defence was affected by the defect noted in paragraph 153 above. … 157. Consequently, Corus has not demonstrated in what way the conduct of the administrative procedure and the content of the contested decision might have been different regarding the gravity of the infringement and, therefore, the amount of the fine, if the Commission had specified, in the SO, the degree of gravity which it attributed to the infringement resulting from the market-sharing agreement in the framework of the Europe-Japan Club (see, to that effect, PVC II , paragraph 71 above, paragraph 1021, and the case-law cited therein). The mere assertion made by Corus in point 6.7 of that reply, to the effect that it presumed that it would have a further opportunity of giving its views on the criteria mentioned in the Guidelines, cannot change its legal position in that regard. 158. Finally, it must be observed, for the sake of completeness, that that conclusion is supported by the fact that Corus put forward, before the Court, arguments which were substantially the same (see paragraph 161 et seq. below) as those appearing in section 6 of its reply to the SO (see paragraph 156 above), in order specifically to challenge the appraisal of the gravity of the infringement found in Article 1 of the contested decision, as set out in recitals 159 to 165 thereto. The Community judicature enjoys unlimited jurisdiction to reappraise the amount of fines imposed under Article 17 of Regulation No 17. It follows that, if a party considers that one of the factors relating to that issue was incorrectly dealt with by the Commission, it can put forward all arguments capable of supporting that view before the Court."

" 14. (1) If the [OFT] proposes to make a decision that the Chapter II prohibition or the Chapter I prohibition has been infringed [it] shall give written notice: … (b) …subject to rules 25 and 26 below, to each person who [the OFT] considers is a party to the agreement, or is engaged in the conduct, as the case may be, which [the OFT] considers has led to the infringement. … (3) A written notice given under paragraph (1) or (2) above shall state the facts on which the [OFT] relies, the matters to which [it] has taken objection, the action [it] proposes and [its] reasons for it."

"7. Mitigation 7.1. For the reasons set out above, it is Apex's position that the OFT has failed to make out a case of infringement of the Chapter I prohibition against it in relation to the Dudley Schools contracts and that accordingly it would be unfair and unreasonable for the OFT to impose any fine on Apex. Without prejudice to the preceding representations, Apex makes the following submissions in relation to any such finding of infringement and calculation of penalty. 7.2. The action the OFT proposes to take relates to comparatively small contracts by a small company. 7.3. Apex did not win the Dudley Schools contracts or make any financial gain from the alleged conduct. The only benefit it received was limited to the increased possibility that it would not be ignored in future rounds of invitations to tender by Dudley MBC. 7.4. Apex sought prices from Howard Evans not to distort competition but to protect its relationship with the client... … 7.6. The duration of the alleged infringement was extremely short (being only 22 days). See further para 6.5 of the November Representations regarding the OFT Guidance (as to the Appropriate Amount of a Penalty). 7.7. Apex considers that any adverse finding against it would be perverse given that Howard Evans: (a) is one of the largest flat roofing businesses in the West Midlands and may benefit from leniency of up to 100%; (b) controlled the prices of the Vedag Villas materials; (c) was the beneficiary of any anti-competitive activity in relation to the Dudley Schools contracts and ultimately won the contracts. 7.8. Any penalty imposed should be nominal or, at most, very low, given (see further para 6 of the November Representations): the limited nature of the alleged infringement; the limited duration of the alleged infringement; the lack of evidence that the alleged infringing agreement had an impact on competition (given, in particular, the role of Howard Evans); the absence of any benefit to Apex from the alleged infringement or any detriment to Dudley MBC; the nature of Apex – being a small player in the market; the nature of dealings in the market generally and Apex's lack of appreciation of the unlawfulness of such practices and that if, as alleged, it has infringed the Chapter I Prohibition it did not do so intentionally; the fact that Apex has fully cooperated with the OFT; the fact that Apex was not a leader of anti-competitive practices and, on any assessment, did not seek to enforce any infringing arrangements; the fact that Apex has, rather than benefiting from, suffered as a result of anti-competitive practices in its industry; the effect the investigation has already had on Apex; the seriousness with which Apex takes competition matters in the light of the investigation; the instigation of a competition compliance programme; the appointment of new directors to give an external perspective on the company's activities; and the detrimental impact any substantial penalty could have on Apex and the detrimental impact that, in turn, could have on competition."

"Apex lost the opportunity to decide how it wished to respond to the proposed infringements and penalties taken together. By effectively putting forward the proposed steps piecemeal Apex was prejudiced in the manner in which it was able to forward its case. This is not simply a matter of abstract theory, it poses real and unfair problems for any recipient of a Rule 14 Notice and subsequent communications purporting to amplify or extend that Notice."

"…these are your figures inclusive of contingencies for two projects with Birm C.C. Frankley = £193460.40 Harborne Hill - £144910.10… Many thanks and have a good holiday"

"…your price including provisional sums and contingencies. Christchurch and Church of the Ascension Schools £166,518 + VAT Hob Green and Wollescote Schools £283,101.00 + VAT…"

"It's a lot of money and we looked at the specification required for the job and the roof areas involved on a roof plan that had been supplied and I went and saw my boss […][ C ] and we looked at it carefully together again. We didn't actually sit very comfortable with the figures that we got to submit …. because it was too high. Now I believe […][ C ] had a conversation with […][ C ] somebody at Apex – the manager there and it was duly decided that we were not gonna actually put a tender in so we didn't actually put a tender bid in at all – it was just an absolute no tender as far as we were concerned because we thought they were having a laugh with the figures …..we didn't return a price at all."

"a concerted practice is a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition."

"5.6. Many Standing Orders require the receipt of a minimum number of bona-fide tenders for a tender to be accepted, sometimes the number is related to the project value. Where contractors do not submit a tender, particularly without prior or timely notification enabling the Officer to approach a substitute contractor, this may cause the number of tenders received to fall below that necessary for the acceptance of a tender. 5.7. In such cases, the action necessary may include a further tender process or a committee report to obtain approval to an exemption to standing orders. This may delay the commencement of a project and place an additional workload on the Officer. Additional consequences are budgetary difficulties associated with a delay in commencement, an increase in fees or a reduction in notable profitability, a knock on effect on other projects due to the additional workload and in extreme cases the abandonment of projects. This can lead to criticism of the Officer and the Department responsible for contract administration."

"2.1. Apex drew a distinction between being removed from a list of approved contractors which a tendering authority had and not being invited to tender in future as a result of not returning a bid following an invitation to tender. Apex accepts that simply failing to respond to an invitation to tender alone is unlikely to result in a company being removed form the list of approved tenders. However, given the necessary discretion which local authority officers have in sending out invitations, there is a very real risk that future invitations will not be extended to a party which does not lodge bids when invited to do so. As set out in our previous submissions…, this is as much a matter of common sense as evidence: if a person invited to bid does not respond it is of disadvantage to the person inviting tenders since they receive fewer; it may, in extreme circumstances, require the inviting authority to follow special processes for appointment which are inconvenient and expensive; and it may be read as a lack of interest in a type of work or work in a particular area on the part of the invitee. Certainly, all of these factors operate as a disincentive to invite a company to tender again."

"If after receiving these tender documents you decide for exceptional reasons that you cannot submit a tender, you are reminded of the provisions of the [Code of Procedure for Single Stage Selective Tendering 1994] which require notification of your withdrawal within two working days of receipt of the tender documents. Failure to give such notification precludes the substitution of another firm and is considered to be a serious breach of the Selective Tendering Principles."

"Please complete and return the enclosed receipt document to acknowledge this tender invitation. Failure to acknowledge and subsequently not to return a tender could result in the suspension or withdrawal of your approved status."

"If, when you receive these documents, unforeseen circumstances now prevent you from submitting a competitive tender, you must immediately inform the officer named above by telephone and return the documents within three days. Late notification of inability to submit a tender is deprecated as this deprives the Trust of the opportunity of obtaining the requisite number of competitive prices. Immediate notification will not adversely affect future invitations."

"64. Article [81] draws a distinction between the concept of 'concerted practices' and that of 'agreements between undertakings' or of 'decisions by associations of undertakings'; the object is to bring within the prohibition of that article a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition. 65. By its very nature, then, a concerted practice does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants. 66. Although parallel behaviour may not by itself be identified with a concerted practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not correspond to the normal conditions of the market, having regard to the nature of the products, the size and number of the undertakings, and the volume of the said market. 67. This is especially the case if the parallel conduct is such as to enable those concerned to attempt to stabilize prices at a level different from that to which competition would have led, and to consolidate established positions to the detriment of effective freedom of movement of the products in the common market and of the freedom of consumers to choose their suppliers. 68. Therefore the question whether there was a concerted action in this case can only be correctly determined if the evidence upon which the contested Decision is based is considered, not in isolation, but as a whole, account being taken of the specific features of the market in the products in question."

"26. The concept of a 'concerted practice' refers to a form of coordination between undertakings, which, without having been taken to the stage where an agreement properly so-called has been concluded, knowingly substitutes for the risks of competition practical cooperation between them which leads to conditions of competition which do not correspond to the normal conditions of the market, having regard to the nature of the products, the importance and number of the undertakings as well as the size and nature of the said market. 27. Such practical cooperation amounts to a concerted practice, particularly if it enables the persons concerned to consolidate established positions to the detriment of …the freedom of consumers to choose their suppliers. 28. In a case of this kind the question whether there has been a concerted practice can only be properly evaluated if the facts relied on by the Commission are considered not separately but as a whole, after taking into account the characteristics of the market in question. … 173. The criteria of coordination and cooperation laid down by the case-law of the Court, which in no way require the working out of an actual plan, must be understood in the light of the concept inherent in the provisions of the Treaty relating to competition that each economic operator must determine independently the policy which he intends to adopt on the common market including the choice of the persons and undertakings to which he makes offers or sells. 174. Although it is correct to say that this requirement of independence does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors, it does however strictly preclude any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market. 175. The documents quoted show that the applicants contacted each other and that they in fact pursued the aim of removing in advance any uncertainty as to the future conduct of their competitors."

"122. … Through its participation in those meetings, it took part, together with its competitors, in concerted action the purpose of which was to influence their conduct on the market and to disclose to each other the course of conduct which each of the producers itself contemplated adopting on the market. 123. Accordingly, not only did the applicant pursue the aim of eliminating in advance uncertainty about the future conduct of its competitors but also, in determining the policy which it intended to follow on the market, it could not fail to take account, directly or indirectly, of the information obtained during the course of those meetings. Similarly, in determining the policy which they intended to follow, its competitors were bound to take into account, directly or indirectly, the information disclosed to them by the applicant about the course of conduct which the applicant itself had decided upon or which it contemplated adopting on the market."

"99. It is settled case-law that, for the purposes of applying Article [81(1)] of the Treaty, there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction or distortion of competition (Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1964] ECR 299, at p. 342; see also, to the same effect, Case C-277/87 Sandoz Prodotti Farmaceutici v Commission [1990] ECR I-45; Case C-219/95 P Ferriere Nord v Commission [1997] ECR I-4411 , paragraphs 14 and 15. … 108. The list in Article [81(1)] of the Treaty is intended to apply to all collusion between undertakings, whatever the form it takes. … The only essential thing is the distinction between independent conduct, which is allowed, and collusion, which is not, regardless of any distinction between types of collusion. … 116. The Court of Justice has further explained that criteria of coordination and cooperation must be understood in the light of the concept inherent in the provisions of the Treaty relating to competition, according to which each economic operator must determine independently the policy which he intends to adopt on the market (see Suiker Unie and Others v Commission , cited above, paragraph 173; Case 172/80 Züchner [1981] ECR 2021 , paragraph 13; Ahlström Osakeyhtiö and Others v Commission , cited above, paragraph 63; and John Deere v Commission , cited above, paragraph 86). 117. According to that case-law, although that requirement of independence does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors, it does however strictly preclude any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market, where the object or effect of such contact is to create conditions of competition which do not correspond to the normal conditions of the market in question, regard being had to the nature of the products or services offered, the size and number of the undertakings and the volume of the said market (see, to that effect, Suiker Unie and Others v Commission , paragraph 174; Züchner , paragraph 14; and John Deere v Commission , paragraph 87, all cited above). 118. It follows that, as is clear from the very terms of Article [81(1)] of the Treaty, a concerted practice implies, besides undertakings concerting together, conduct on the market pursuant to those collusive practices, and a relationship of cause and effect between the two. … 121. For one thing, subject to proof to the contrary, which it is for the economic operators concerned to adduce, there must be a presumption that the undertakings participating in concerting arrangements and remaining active on the market take account of the information exchanged with their competitors when determining their conduct on that market, particularly when they concert together on a regular basis over a long period, as was the case here, according to the findings of the Court of First Instance. 122. For another, a concerted practice, as defined above, falls under Article [81(1)] of the Treaty even in the absence of anti-competitive effects on the market. 123. First, it follows from the actual text of Article [81(1)] that, as in the case of agreements between undertakings and decisions by associations of undertakings, concerted practices are prohibited, regardless of their effect, when they have an anti-competitive object. 124. Next, although the concept of a concerted practice presupposes conduct of the participating undertakings on the market, it does not necessarily imply that that conduct should produce the concrete effect of restricting, preventing or distorting competition. … 131. A comparison between [the] definition of agreement and the definition of a concerted practice … shows that, from the subjective point of view, they are intended to catch forms of collusion having the same nature and are only distinguishable from each other by their intensity and the forms in which they manifest themselves."

"where one competitor discloses its future intentions or conduct on the market to another when the latter requests it or, at the very least, accepts it…" (paragraph 1849). and that "

"66. The case-law shows that, where a decision on the part of a manufacturer constitutes unilateral conduct of the undertaking, that decision escapes the prohibition in Article 81(1) of the Treaty (Case 107/82 AEG v Commission [1983] ECR 3151 , paragraph 38; Joined Cases 25/84 and 26/84 Ford and Ford Europe v Commission [1985] ECR 2725 , paragraph 21; Case T-43/92 Dunlop Slazenger v Commission [1994] ECR II-441 , paragraph 56)."

"[…][ C ] These are your figures inclusive of contingencies for two projects with Birm. C.C. Frankley = £193,460.40 Harborne Hill = £144,910.10 Many thanks and have a good holiday. Best wishes […][ C ]" (b) The extract of the record of interview with Mr C of Briggs which reads as follows: "… we were asked to do a cover for a couple of schools that Apex roofing knew about that were coming out to tender…. The jobs or the enquiries duly hit my desk and remained there until this fax came through with our prices to put in." "

"43. The classic statement of the obligation of the Community institutions to support their decisions with a statement of the principal points of fact and of law upon which it relies is to be found in Remia v Commission : '[A]lthough under Article 190 of the EEC Treaty [now Article 253 EC] the Commission is required to state the factual matters justifying the adoption of a decision, together with the legal considerations which have led to its adopting it, the article does not require the Commission to discuss all the matters of fact and of law which may have been dealt with during the administrative proceedings. The statement of reasons on which a decision adversely affecting a person is based must allow the Court to exercise its power of review as to the legality of the decision and must provide the person concerned with the information necessary to enable him to decide whether or not the decision is well founded.' …"

"Statutory background 1.1 Section 38(1) of the Competition Act 1998 ("the Act") requires the Director General of Fair Trading to prepare and publish guidance as to the appropriate amount of any penalty. 1.2 Under section 36 of the Act the Director General of Fair Trading may impose a financial penalty on an undertaking which has intentionally or negligently committed an infringement of the Chapter I or Chapter II prohibition. 1.3 The sector regulators have concurrent powers with the Director General of Fair Trading to apply and enforce the Act in their designated sector under section 54 of the Act. They also have the power to impose financial penalties on undertakings. References to the "

"2.1 Any financial penalty imposed by the Director under section 36 of the Act will be calculated following a five step approach: calculation of the starting point by applying a percentage determined by the nature of the infringement to the "relevant turnover" of the undertaking (see paragraph 2.3 below) adjustment for duration adjustment for other factors adjustment for further aggravating or mitigating factors adjustment if the maximum penalty of 10% of the "section 36(8) turnover" of the undertaking is exceeded and to avoid double jeopardy. Details on each of these steps are set out in paragraphs 2.3 to 2.15 below. … Step 1 – starting point 2.3 The starting point for determining the level of financial penalty which will be imposed on an undertaking is calculated by applying a percentage rate to the "relevant turnover" of the undertaking, up to a maximum of 10%. The "relevant turnover" is the turnover of the undertaking in the relevant product market and relevant geographic market affected by the infringement in the last financial year. This may include turnover generated outside the United Kingdom if the relevant geographic market for the relevant product is wider than the United Kingdom. 2.4 The actual percentage rate which will be applied to the "relevant turnover" will depend upon the nature of the infringement. The more serious the infringement, the higher the percentage rate is likely to be. Price-fixing or market-sharing agreements and other cartel activities are among the most serious infringements caught under the Chapter I prohibition. Conduct which infringes the Chapter II prohibition and which by virtue of the undertaking's dominant position and the nature of the conduct has, or is likely to have a particularly serious effect on competition, for example, predatory pricing, is also one of the most serious infringements under the Act. The starting point for such activities and conduct will be calculated by applying a percentage likely to be at or near 10% of the "relevant turnover" of the infringing undertakings. 2.5 It is the Director's assessment of the seriousness of the infringement which will determine the percentage of "relevant turnover" which is chosen as the starting point for the financial penalty. When making his assessment, the Director will consider a number of factors, including the nature of the product, the structure of the market, the market share(s) of the undertaking(s) involved in the infringement, entry conditions and the effect on competitors and third parties. The damage caused to consumers whether directly or indirectly will also be an important consideration. The assessment will be made on a case by case basis for all types of infringement. 2.6 Where an infringement involves several undertakings, an assessment of the appropriate starting point will be carried out for each of the undertakings concerned, in order to take account of the real impact of the infringing activity of each undertaking on competition. Step 2 – adjustment for duration 2.7 The starting point may be increased to take into account the duration of the infringement. Penalties for infringements which last for more than one year may be multiplied by not more than the number of years of the infringement. Part years may be treated as full years for the purpose of calculating the number of years of the infringement. Step 3 – Adjustment for other factors 2.8. The penalty figure reached after the calculations in steps 1 and 2 may be adjusted as appropriate to achieve the policy objectives, outlined in paragraph 1.8 above, in particular, of imposing penalties on infringing undertakings in order to deter undertakings from engaging in anti-competitive practices. The deterrent is not aimed solely at the undertakings which are subject to the decision, but also at other undertakings which might be considering activities which are contrary to the Chapter I and Chapter II prohibitions. Considerations at this stage may include, for example, the Director's estimate of the gain made or likely to be made by the infringing undertaking from the infringement. Where relevant, the Director's estimate would account for any gains which might accrue to the undertaking in other product or geographic markets as well as the "relevant" market under consideration. The assessment of the need to adjust the penalty will be made on a case by case basis for each individual infringing undertaking. 2.9. This step may result in a substantial adjustment of the financial penalty calculated at the earlier steps. The consequence may be that the penalty which is imposed is much larger than would otherwise have been imposed. The result of any one of steps 2 or 3 above or 4 below may well be to take the penalty over 10% of the "relevant turnover" identified at step 1, but the overall cap on penalties is 10% of the "section 36(8) turnover" referred to in step 5 below and must not be exceeded. …"

"The Parties identified in the Decision constitute a not insignificant part of suppliers of RMI services for flat roofs in the West Midlands area. Also, the Parties have made representations that 'cover pricing' in the sense used in this Decision (see paragraph 18 above) is a widely-encountered phenomenon in the roofing industry. The Parties' infringements gave purchasers of flat-roofing services the impression that there was more competition in the tender process relating to a specific contract than there actually was. However, the OFT notes that the instances of cover pricing dealt with in this Decision are individual, discrete infringements. The OFT considers that such infringements are not the most serious examples of collusive tendering." [Emphasis in the original]

"The OFT has had regard to the nature of the product, the structure of the market, the market share of the Parties, market entry conditions and the effect of the infringements on competitors and third parties, as set out in paragraphs 387 to 391 above. On the basis that the market is fragmented (see paragraph 388 above) and none of the Parties has a leading market share (see paragraph 389 above), and the fact that the Parties' infringements were - by virtue of the fact that they were individual, discrete infringements - not the most serious examples of collusive tendering, the OFT has fixed a starting point of […][ C ]% of relevant turnover for all the Parties."