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Construction companies accused of fixing prices

17/04/2008

The Office of Fair Trading (OFT) has named 112 construction firms in an investigation into bid-rigging in the industry.

Following one of the largest-ever Competition Act investigations, the OFT has issued a statement of objections (SO) alleging the companies colluded with their competitors during a tender process to get a higher price for the job.

The regulator said many organisations, including schools, universities and hospitals, may have been overcharged because of the scam.

In addition, the document alleges that some construction companies made arrangements whereby the successful bidder would pay an agreed sum of money to the unsuccessful bidder (known as a 'compensation payment') - a more serious form of bid rigging, usually through issuing false invoices.

The OFT's investigation started with a complaint from the East Midlands in 2004, but the watchdog soon realised the problem was more widespread and breaches of competition law have been found all over England.

OFT chief executive John Fingleton said: "Cartel activity of the type alleged today harms the economy by distorting competition and keeping prices artificially high.

"This 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."

The OFT added that no assumption should be made at this stage that there has been an infringement of competition law by any of the companies named in the SO and the firms now have the opportunity to make their case to the regulator.