OFT to fine construction companies E-mail
Thursday, 03 April 2008

The Office of Fair Trading (OFT) is expected to impose multi-million pound fines on 150 construction companies after a bid-rigging investigation into local council contracts worth £3bn.

Evidence of wrongdoing is expected to be sent to the construction companies this month as part of the OFT's "statement of objections”. The recipients will include six quoted construction companies that have admitted involvement.

The inquiry, into 3,000 contracts in England, is the OFT's biggest investigation into cartel activity. Companies found guilty of uncompetitive behaviour can be fined 10% of their world turnover. For Balfour Beatty, one of six quoted companies cooperating with the OFT, this equates to more than £600m. If the behaviour is deemed to be criminal, directors could be jailed for five years.

Construction companies have been scrambling to help the OFT, which began its investigation in 2005, in the hope that any fines may be reduced. So far 38 companies have applied for leniency, although many larger organisations are thought to be waiting to see what evidence the watchdog has.

The focus of the OFT's investigation is on "cover pricing", where companies place a high bid for work that they have no intention of winning so that they are not left off a client's tender list. The cover price is fixed after consultation with another supplier.

 

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