Concrete questions

SEAMUS Maye sat at the back of the court, surrounded by friends and associates.

A few feet away, Peter Goode looked on intently at the proceedings.

Both were dressed in dark suits with white shirts and ties. Both wore middle age on faces that also betrayed the lines of long struggle. Both are in it for the long haul.

The two men were attending a court hearing earlier this month in which Maye is, as he sees it, fighting a battle against one of the more powerful forces in the State.

Goode is engaged in his own battle with the same entity. Both men are separately awaiting rulings from a High Court judge as to whether they can expect to have their day in court for a full hearing against the building materials firm, CRH.

Both allege the company has been at the centre of operating a price-fixing cartel in the concrete industry. If their allegations have any substance, then it would mean the exchequer was defrauded out of hundreds of millions of euro. The State is the biggest purchaser of concrete in Ireland.

Through the years of the building boom in particular, the supply of cement and concrete products was a lucrative business. If it ever came to light that price fixing through cartels kept the price artificially inflated, then a major action would be on the cards, which could yield a huge windfall for the exchequer.

CRH denies all the allegations. The company can point to the fact that the allegations have been around for decades, yet no court or state agency has ever found anything illegal in how it operates in its main markets. The other side of the coin is that no court or state agency has ever properly investigated what actually goes on in the markets concerned, despite decades of complaints. In other jurisdictions, investigations have revealed cartels and price fixing in the concrete and cement business, and in at least two, companies connected with CRH have been implicated.

CRH is one of the State’s most successful companies. It operates in over 30 countries. Yet, at home, CRH has, for decades, been the focus of accusations of uncompetitive and illegal practices, of fixing prices, and overseeing cartels. If any of these allegations were to be proved in a court of law, it would vindicate Maye and Goode in their belief that they were both separately driven out of business because they refused to play ball in an illegal operation.

For years, Maye fought a lonely fight. There was little corroboration for his claims. He maintains that this is because anybody who didn’t play ball with CRH would find themselves out of business, just as he has. Equally, the firm could claim that he was embittered by his failure in the business and his allegations had no substance. Now, however, Peter Goode and his family corroborate the bigger picture that Maye has painted. The High Court has heard affidavits from Goode’s father Tom which detail specific cartel meetings and how the members of the cartel conducted their affairs.

THE BUSINESS

There have been allegations about how CRH abuses its dominant position, in which it has controlled up to 80% of the cement market, for at least 25 years. In 1987, Olivia O’Leary fronted a Today Tonight investigation into the concrete business in which a number of competitors alleged practices such as their operations being secretly photographed to identify customers. There were allegations of how CRH had cut off the supply of cement from abroad, and crucially, how the firm had sought to initiate discussions on organising a cement cartel.

The purpose of much of the activity, according to the competitors, was to keep the cost of cement in the Republic higher than in the North. Local authorities were obliged to use Irish-made cement, which in turn pumped up the cost of constructing infrastructure and public housing. The Construction Industry Federation complained at the time about the practices.

Among those interviewed was Sean Quinn, who was feeling the brunt of CRH’s power as he attempted to establish his own operation.

The cement giant admitted to some of the practices but was adamant it didn’t operate a cartel. Many of the practices were discontinued as European competition law evolved, but the allegations about cartels never went away.

BIGGEST BOY IN THE CLASS

CRH is one of Ireland’s most successful companies. The group was formed from a merger in 1970 and operates in 36 countries, employing about 75,000 people. By any standards, it has been a huge success, and is often put forward as an example of how Irish companies can go out and take on the world.

However, controversy has also stuck to CRH like a cheap suit. Its first chairman was Sean Lemass, and when he retired it was reported in 1972 that the company had approached Charlie Haughey to take over. Haughey was then languishing on the backbenches in the wake of the Arms Trial, but he declined the offer.

Later, Des Traynor, who ran the illegal offshore Ansbacher accounts, which were designed to evade tax, took the reins as chairman. After his death in 1994, it emerged that he had skimmed money from the accounts to support Haughey’s lifestyle.

The Moriarty Tribunal reported that eight of 15 directors in CRH held an Ansbacher account.

Other political figures associated with the company included former chairman Tony Barry, whose brother Peter is a former foreign affairs minister, and Fine Gael grandee. Richard Bruton, the enterprise minister, who once worked for the company as an economist.

One of the more controversial deals CRH was involved in was the purchase of 147 acres in Glending, Co Wicklow, the location of a quarry. The lands were bought for €1.6m without going to public tender, and were soon discovered to be worth a multiple of that. The sale occurred while Haughey was Taoiseach and Traynor chaired CRH. For years, controversy was attached to the purchase, but a report in 2003 cleared all involved of anything untoward.

The company has been hauled over the coals in other jurisdictions for price fixing allegations. In Poland, a subsidiary was fined €25m after an investigation. That fine is being appealed.

CRH was one of five firms found to have been operating a price fixing arrangement in the North in the 1980s and 1990s. The EU also fined CRH in the mid-1990s for being part of a European price-fixing cartel. Yet there has never been an investigation into the stream of allegations about price fixing in this jurisdiction. If the High Court were to hear a full case, this would effectively amount to an investigation into the sector. Such a case could present CRH with the opportunity to once and for all dismiss all controversy about how it conducts itself in the Irish market.

However, any case would also be hugely expensive, and in the event that the company would win, there would be little prospect of recouping most of its costs.

THE MAYE CASE

Seamus Maye is a Sligo-based businessman. His family were in the building materials business going back to the 1950s, but eventually sold up in 1994. Maye claims the sale was forced upon him because he wouldn’t play ball with what he says was a price-fixing cartel.

His case, taken through the family company Framus, includes a whole host of allegations, detailing specific projects in which he claims his company fell victim to the workings of a cartel. The projects include work in Croke Park, Dublin Airport, Wood Quay, and the Guinness brewery. In each case, he claims he agreed prices with the client only to be undercut by a price that was below cost. He claims that in a number of cases, some of the companies in the cartel didn’t price jobs, because there was an agreement to split up the work. Again, details of specific jobs are given.

As his business was coming under increasing pressure to sell out, Maye took to wearing a hidden microphone to tape conversations he had with various representatives of CRH subsidiaries and other companies

The High Court has been told of one meeting in March 1993 between Seamus Maye and Sean Quinn, who was a major player in the cement industry. According to Maye, Quinn told him other competitors in Galway had told Quinn “they would hang Maye out to dry”.

In June 1993, in a meeting with a representative of CRH subsidiary, Irish Cement, Maye taped the meeting. He claims he told a Mr O’Loughlen that he wanted his own business. The court heard that O’Loughlen replied: “That’s no solution to it either, Seamus… The fight will just go on and on and obviously there is bad blood on both sides and that’s not good for anybody. I mean, I’ve seen these things in places like Tipperary and Galway and its going on in the West now with Harrington — everybody loses their [expletive] and at the end of the day, the commercial reality has to take over with everybody and a deal has to be struck somewhere along the line.”

Maye is now awaiting a decision from the High Court as to whether he can continue with his action. CRH is claiming that undue delay since 2006 means that the case should be struck out. A ruling is expected in the coming months.

THE GOODE CASE

The Goodes were involved in the concrete business since the 1980s. In 1984, Tom Goode claims he was approached by a former executive of CRH who told him how the price-fixing cartel operated.

He says he was shown a spreadsheet with details of upcoming contracts where the divvying up of the work was discussed. Goode says he then became involved in the cartel until he exited the business in 1987. He returned in 1993, and the company was again involved in a cartel — this time in the West of Ireland — before finally going out of business.

The Goodes claim their commercial demise was because they wouldn’t play ball with a cartel in the Dublin area.

The affidavit filed by Tom Goode in the current case details what he clams were meetings by cartels in the mid-1980s, when he was running the family business. Their action includes others who they claim were members of the cartel, including Kilsaran Concrete. “Meetings of the cartel were held at least every two weeks, sometimes weekly from then on. These meetings took place in different hotels around Dublin.”

The affidavit was filed to demonstrate that a pattern of behaviour has existed in the cement industry dating back to those days. The defendants in the current action deny any involvement in the activities alleged.

Goode went on: “The various members of the cartel would take it in turns each week to arrange the cartel meetings and the hotel meeting room would be booked in that particular member’s name and paid for in cash.

“The chair of the meeting was rotated. The chairman would commence by indicating which contracts he was aware of that were coming up in the Dublin area.. I learnt from these conversations that regular meetings of this nature were being held by the other cartel members in different locations around the country.”

Barry Goode, the operations manager for the company, has outlined allegations of a cartel operating in the Galway area through the years of the construction boom in the last decade.

The Goodes are awaiting a ruling from the High Court in which CRH and the other companies are demanding security for costs of any full action.

The security would require the Goodes to stump up of the order of €1.5m, which the family claims they cannot access since their business ceased trading last year.

THE WATCHDOG

The Competition Authority does not comment on ongoing investigations. It was reported last November a probe has now been initiated into the concrete business on foot of the Goodes’ claims in court, but this claim cannot be confirmed.

What is surprising is the apparent failure of the authority to conduct any investigation into the sector over the last two decades despite numerous complaints and the results of investigations in other jurisdictions.

Equally, successive governments have appeared unwilling to pursue the matter.

Last November, in a Dáil debate, John Perry, the junior minister for enterprise and jobs, responded to opposition calls for an investigation.

“I am aware that the Competition Authority, as the statutory independent body responsible for enforcing competition law in the State, has received information relating to alleged anti-competitive behaviour in the concrete industry.

“The Competition Act 2002 provides that the authority is independent in the performance of its functions. Under that act, it is responsible for investigating breaches of the legislation.

“As investigations and enforcement matters generally are part of the day-to-day operational work of the authority, I have no direct function in the matter and it would be inappropriate to comment on any of its investigations.”

Unfortunately, the minister was incorrect in his assertions. The Competition Act 2002 has provision under Section 30 for a minister to order the authority to investigate a particular sector.

As of yet, that has not happened in an area that has been rife with controversy for over 20 years.



Breaking Stories

No Lotto winner - jackpot heads for €4m

Europe is a force for peace in N. Ireland and around the world, Belfast rally told

PSNI dispute President Higgins' security claims for Belfast trip

Robin Swann: DUP dragged unionism into the gutter

Breaking Stories

A tempting taste of what is on offer in Dingle

Too much information? Lindsay Woods on 'sharenting'

Graham Norton: ‘If it was hard work I couldn’t do it’

Saying yes to the dress: Behind the scenes at the royal wedding

More From The Irish Examiner