112 named in UK bid rigging probe

17 April 2008

The UK's Office of Fair Trading (OFT) has alleged that 112 construction companies in the UK have engaged in bid rigging. The allegations, in the form of a Statement of Objections, follow one of the largest ever investigations under the UK's Competition Act.

An activity the OFT said was particularly prevalent was cover pricing - the practice of deliberately entering a bid that is too high to win a contract. This is designed to either ensure that work is not won but that a contractor stays in favour with the client for future work, or to ensure a competitor wins a contract.

In addition to widespread cover pricing, the OFT alleges that some companies entered into agreements whereby a successful contractor would make ‘compensation payments' to unsuccessful bidders.

Long investigation

The OFT started looking into collusion in the UK construction industry following a specific complaint in 2004. Since then it says it has received evidence of cover pricing "on thousands of tender processes," but has focused its investigation on some 240 specific alleged infringements.

The OFT raided 57 companies as part of its investigation, and has received 37 applications for leniency. Under such arrangements, companies can apply for a reduced fine if they admit their guilt. Following these leniency applications, all the companies being investigated were offered reduced fines, and 40 accepted this offer.

Commenting on the investigation, OFT chief executive John Fingleton said, " The investigation, together with the OFT's previous decisions in the roofing sector, will hopefully send out a strong message to the construction industry about the seriousness with which we view suspected anti-competitive behaviour. Businesses have no excuses for not knowing and abiding by the law."

Although many of the companies named in the OFT's Statement of Objections are small regional contractors, the list also includes some of the bigger names in the UK's, and indeed Europe's, contracting fraternity. These include Balfour Beatty, Ballast Nedam, Bowmer & Kirkland, Carillion, Henry Boot, John Sisk, Kier, Propencity and Willmott Dixon.
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