By Shanima A and Yadarisa Shabong
(Reuters) - Britain's antitrust regulator is investigating London-based outsourcer Mitie Group (LON:MTO) Plc over potential breaches of competition laws relating to the tender process for contracts to run two immigration removal centres, the regulator said on Friday.
Shares in London-listed Mitie tumbled more than 10% on the news.
The Competition and Markets Authority (CMA) launched the investigation on Tuesday into "suspected anti-competitive conduct" relating to the procurement processes run by Britain's Home Office for the contracts to supply certain services at the Heathrow and Derwentside immigration removal centres (IRC).
Immigration removal centres house foreign nationals who are awaiting decisions on their asylum claims or who face deportation as a result of a failed application.
The CMA said no assumption should be made at this stage that any competition law has been infringed.
Mitie, which runs the two immigration centres, said it was cooperating with the CMA and was confident that "it has no case to answer and will be fully exonerated."
"Mitie withdrew from the Derwentside IRC tender process, without submitting a bid, due to the Home Office's 'lotting' conditions, which would have prevented a single bidder from winning both contracts," the British company said.
The British outsourcer said it remains engaged in the Heathrow IRC process. Mitie has run the Heathrow immigration centre, which can house as many as 965 residents and which it calls the largest immigration centre in Europe, since 2014 through its Care & Custody division.
It won the contract to run the Derwentside IRC in August last year. That contract extends until 2023. Both contracts are up for renewal.
Brokerage Jefferies estimates the contracts to be less than 2% of Mitie's revenue and believes the company will have no restrictions on bidding or securing UK government work while the investigation is ongoing.
The CMA is also investigating U.S.-based contractor PAE Inc, which was acquired by peer Amentum Government Services last month, relating to the tender process for the contracts.
"We are fully cooperating with the investigation and believe PAE's conduct was appropriate. Due to the ongoing investigation, we are unable to provide a further response at this time," a PAE spokesperson said.