Probe into how bid-rigging firm secured major Cardiff Capital Region contract

Martin Shipton

An investigation is underway into the circumstances which led to a Cardiff Capital Region multi-million pounds demolition contract being awarded to a company fined £17.6m for its involvement in a corrupt bid-rigging cartel.

The Erith Group, headquartered in Erith, Kent, beat rivals to secure the publicly funded contract to knock down the former Aberthaw Power Station near Llantwit Major in the Vale of Glamorgan as part of a major regeneration scheme.

But Nation.Cymru has been told that an unsuccessful bidder has raised concerns about Erith’s victory in the process in light of the hefty fine imposed on it in March 2024 by the Competition and Markets Authority (CMA). Erith, together with nine other demolition contractors, was found to have colluded with competitors when submitting bids for work on 19 projects with a combined worth of more than £150m.

At the time, the CMA said the 10 contractors “collud[ed] on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts”, adding: “These bids were rigged, deceiving the customer that they were competitive when that was not the case.”

Erith’s fine was the largest of the 10 imposed. Unlike eight of the firms involved, Erith did not admit its involvement in the scandal and so did not have its fine reduced.

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Director's report

In a director’s report, Erith chairman Steve Darsey said that since the CMA’s finding of breaches of competition law “concern only one company within the [Erith] group”, calculating the fine based on the whole group’s turnover is “unfair and disproportionate”.

The CMA did not specify which company within Erith Group was found to have taken part in bid rigging, but the fines were addressed to Erith Contractors Ltd and Erith Holdings Ltd. It added that the companies were “entities who are either the economic successor or parent companies of those directly involved in conduct”.

The Aberthaw contract was awarded to Erith Contractor Ltd.

Darsey also stated in the director’s report that the group had “established robust new systems” that make it “impossible for any further infringements of competition law to occur”, with the company setting up a new compliance platform and appointing a compliance manager who reports directly to the board.

Earlier in 2024, Erith’s former managing director David Darsey, who is also a former president of the National Federation of Demolition Contractors, was disqualified from being a director for five years and 10 months after admitting to participating in cover-pricing arrangements.

As well as the CMA fine, the group has set aside a further £700,000 in liabilities following an accident that resulted in a fatality at its premises in Kent. Erith Plant Services has been charged by the Health and Safety Executive with the case due to be heard in 2025.

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Two stations

Commissioned in the 1960s, the Aberthaw plant consisted of two stations - the 600MW Aberthaw A and the 1.4GW Aberthaw B - with much of the plant’s coal supplied by the nearby Tower Colliery in Hirwaun. Operations at the plant ceased in 2020 with the closure of Aberthaw B, and CCR (Cardiff Capital Region) then purchased the site in 2022.

The CCR covers 10 local authority areas including the cities of Cardiff and Newport, plus surrounding regions such as Monmouthshire, Caerphilly and Vale of Glamorgan. Its board has representatives from each of the local authorities. With a population of 1.5 million, CCR makes up almost half the total population of Wales.

CCR subsequently set up CCR Energy to demolish, clear, and remediate the site, with a view to transforming Aberthaw into a green energy hub.

A deal with SSE Energy Solutions will now see investment at Aberthaw, exploring applications including advanced technologies for power networks, heating and cooling systems, electric vehicle charging and energy management, generation and storage. According to SSE, the project presents a unique opportunity for the region to benefit from low-carbon jobs and a financial boost for local communities.

“We aspire to be the UK’s leading provider of local clean energy infrastructure,” Carl Davies, director of commercial at SSE Energy Solutions said in a statement at the time the deal was announced.

“This agreement with CCR Energy means that we can work together to deliver innovative green projects, create good green jobs and create social value in Aberthaw and across South East Wales.”

The CCR covers 10 local authority areas including the cities of Cardiff and Newport, plus surrounding regions such as Monmouthshire, Caerphilly and Vale of Glamorgan. With a population of 1.5 million, CCR makes up almost half the total population of Wales.

“We need to sell our region’s competitive strengths on a global stage, and seek out the investors, backers and markets that like our offer,” Kellie Beirne, chief executive officer of CCR told The Engineer magazine.

“With its strategic location, thriving economy, and ambitious development projects, CCR offers investors a compelling opportunity to be part of its growth story.”

'Enormous concern'

A well-placed source told us: “There is enormous concern over how the contract came to be awarded to a firm found to have been involved in bid-rigging and a full investigation is taking place to establish all the relevant facts.”

Cardiff Capital Region was unable to comment because relevant personnel are still on their festive break.