The Office of Fair Trading has fined 103 construction companies a total of £130m for rigging bids for building contracts.
The fines follow one of the most complex cases ever investigated by the OFT, which concluded the firms had engaged in illegal anti-competitive bid-rigging activities on 199 tenders from 2000 to 2006, mostly in the form of a practice known as ‘cover pricing’.
The OFT said cover pricing occurred when firms submitted quotes for jobs at an artificially high price with no intention of winning the contract, so the client had a misleading impression about the real extent of competition.
The infringements affected building projects across England worth more than £200m including schools, universities, hospitals, and numerous private projects ranging from the construction of apartment blocks to housing refurbishments.
Eighty-six out of the 103 firms received reductions in their penalties because they admitted their involvement in cover pricing prior to today’s OFT announcement.
Simon Williams, the OFT’s senior director for this case, said: “Our investigation has uncovered significant infringements of competition law on nearly 200 projects across England.
“Bidding processes designed to ensure clients and in many cases taxpayers receive the best possible choice and price were distorted, creating a real risk of increased prices.
“This decision sends a strong message that anti-competitive and illegal practices, including cover pricing, must cease.
“The OFT welcomes initiatives by the leadership of the construction industry to add weight to that message through a clear compliance code which we hope will help to embed more fully a culture of competition within the construction sector.”
The biggest penalty was levied on Kier Group, which was told to pay £17.9m. Other companies that were heavily penalised included: Interserve, which was fined £11.6m; Ballast Nedam (£8.3m); Galliford Try (£8.3m); Bowmer & Kirkland (£7.6m); Carillion (£5.4m); and Balfour Beatty (£5.2m).
Galliford Try said it “deeply regrets” any breaches of competition law and added the incidents took place before cover pricing was found to be anti-competitive.
“It is now over five years since the last incidence occurred and Galliford Try has in place a comprehensive competition law compliance policy and procedures to ensure it does not engage in anti-competitive activities, including cover pricing,” the company said.
