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Civils firms may be next for OFT probe

Civil engineering firms have been warned that the Office of Fair Trading may turn its investigation into bid-rigging in the construction industry on to the highways and infrastructure sector.

Last September 103 building contractors were fined a total of £129M for cover-pricing after a five-year investigation of thousands of contracts with a value of more than £3bn.

Cover-pricing is when contractors submit deliberately inflated tenders to ensure they do not win work, but allow them to remain on client’s tender lists.

Fines were significantly lower than they could have been because the OFT found no evidence that simple cover-pricing results in higher prices to clients.

Now, legal experts have warned that the OFT does not believe that the problem has been eradicated and that it may be preparing to launch another assault.

“The OFT says it receives a number of calls every week to its hotline. It does believe the problem [of cover pricing] has not gone away,” said Pinsent Masons partner Alan Davis.

“Highways maintenance, infrastructure and civil engineering contracts were specifically excluded from the original investigation. The entire sector has not been cleared.

“New investigations are a real possibility. The main message is it is just not worth the risk,” he said.

Twenty-five firms found guilty in the OFT’s original investigation have appealed to the Competition Appeal Tribunal, mostly on the level of fines. These are expected to take up to 10 months to be heard.

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