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Bid rigging awareness has grown in construction sector, says OFT

Construction sector research by the Office of Fair Trading (OFT) has found improvements in awareness and understanding of competition law and bid rigging.

The OFT has published an independent evaluation of its recent competition enforcement activities in the construction sector. The report shows a significant rise in understanding of anti-competitive practices, and marked improvement in business behaviour, amongst construction firms.

The findings come after the OFT fined 103 construction firms in England a total of £129.5M last year for illegal anti-competitive bid-rigging activities, following the OFT’s investigation into anti-competitive collusion (NCE 22 September 2009).

The evaluation highlights a number of developments, including:

  • Nearly 75% of contractors are aware of the OFT’s decision of September 2009 on bid rigging in the construction industry in England. In 2008, fewer than a third were aware of earlier infringement decisions in the construction sector.
  • Nine in 10 construction firms now recognise that bid rigging, including cover pricing, is a serious breach of competition law with associated penalties.
  • 75% of contractors are aware of fines as a penalty for cover-pricing, compared to less than half in 2008.
  • Approximately two in three procurers have introduced a new mechanism in the last two years to detect or prevent anti-competitive practices.

In addition, the research provides insights into issues such as the important role of media reports as sources of information about the OFT’s work. Trade associations are perceived as more important sources of information on competition issues than in 2008. 

The research, based on surveys of construction contractors and procurers, was conducted by Europe Economics. Results from a first phase, conducted in 2008, were compared with a second phase, conducted in 2010.

The OFT’s approach to competition enforcement involves a relatively small number of high impact cases in order to create a strong deterrent effect across sectors.

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