The High Court has refused an application by a director to remain in post after admitting his role in an illegal demolition cartel.
Nicholas Brown, former managing director of Brown and Mason Group, agreed an undertaking in May last year with the Competition and Markets Authority (CMA) to not serve as a company director for seven years following his role in demolition bid collusion.
In July, Brown applied to the High Court for permission to continue to act as a director and to be involved in the management of Brown and Mason Limited, and its holding company NRLB Limited, on the basis that the companies needed his continued services as a director.
However, in a ruling released yesterday, Insolvency and Companies Court Judge Prentis refused him permission and accepted the CMA’s argument that overturning the ban could undermine its ability to crack down on cartel activities.
The judge noted that the CMA had allocated more than 2,000 hours of its employees’ time to the demolition bid-rigging cases and that it argued company fines alone were not sufficient to deter bribery.
He agreed that competition rules provided “positive public benefit” and said this was reinforced through sanctions on individuals, but diluted if they were removed.
In a statement after the judgment was issued, Juliette Enser, the CMA’s senior director of cartels, said: “Personal consequences, such as director disqualification, are a powerful deterrent – something which the court’s decision clearly recognises. By rejecting Mr Brown’s request, the court’s judgment has shown that protecting the public should not be undermined.”
Brown is allowed to remain in post at Brown and Mason Group Limited and NRLB Limited until 28 July, under strict conditions, in order to enable transition at the companies. He will then be banned from being a director or managing a company until 29 July 2030.
The same CMA probe last year also secured disqualification undertakings from Michael Cantillon, former director of Cantillon, for seven years and six months, and David Darsey, former director of Erith (five years and 10 months).
Another former Cantillon managing director, Paul Cluskey, also signed a disqualification undertaking for four-and-a-half years, but the High Court later accepted an application that he be allowed to continue as a director at the firm if a number of conditions were met by Cantillon, owing to his central role there.
However, Cluskey cannot serve as a director of any other company.
In the ruling on Brown’s application, Judge Prentis noted that press coverage, including in Construction News, which highlighted Cluskey as “win[nning]” that case, had helped to “erode the public benefit in a strong competition regime” and added to the case against Brown’s bid to continue as a director.
Last year, the CMA found Brown had been personally involved in two breaches of competition law affecting contracts for demolition services with a total value of more than £30m – one relating to the Shell Building on London’s Southbank in 2013, and the other relating to the Lots Road Power Station in Chelsea, west London, in 2014.
As part of the cartel agreements, so-called ‘compensation payments’ with a total value of £700,000, excluding VAT, were paid to Brown and Mason by two competitors – McGee and Scudder.
Brown admitted taking a “central role” in the agreements, including by instructing staff to collect the payments by issuing invoices relating to “fictional services and goods” that were never supplied by Brown and Mason.
He also admitted that, as a shareholder in Brown and Mason, he stood to benefit personally from these payments, and that he understood at the time that his conduct was wrong.
Brown and Mason sent letters to the United Nations outlining the firm’s zero-tolerance policy towards corruption and bribery each year from 2012-16, with the latter three signed by Nicholas Brown himself.
In yesterday’s judgment, Judge Prentis noted “that proclamation was entirely hollow”.
Brown’s conduct came to light as part of the CMA probe into bid rigging in the demolition industry, which saw 10 companies, including Scudder and McGee, as well as Brown and Mason, fined a combined total of nearly £60m in March 2023.