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OFT imposes £130M fines for bid rigging

Contractors have hit out at the Office of Fair Trading’s (OFT) decision to impose £130M of fines on 103 construction firms it found guilty of bid rigging.

UK Contractors Group (UKCG) director Stephen Ratcliffe criticised the decision as “unfair” and said it could not have come at a worse time for the industry.

The OFT imposed fines totalling £129.5M after finding the firms guilty of anti-competitive bid rigging activities on 199 tenders from 2000 to 2006.

The affected projects were worth over £200M and included schools and universities as well as private schemes.

“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.”

Simon Williams, OFT

Most of the fines relate to cover pricing activities where one or more bidders for a project put in an artificially high price to ensure another firm wins the job.

The OFT also uncovered six instances where successful bidders had paid between £2,500 and £60,000 to the unsuccessful bidder through false invoices.

“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,” said OFT senior director for the case Simon Williams. But Ratcliffe said it was unfair to single out firms. “These punitive fines will be hard to absorb and will cost jobs.

“Everybody knows − including the OFT − that cover pricing was widespread in the industry in the past,” said Ratcliffe.

Kier suffered the biggest blow with a fine of almost £18M. Interserve must pay £11.6M. Others hit with large penalties include Galliford Try, Carillion, Balfour Beatty subsidiary Maunsell and John Sisk & Son.

Reduced penalties were imposed on 86 of the 103 firms because they admitted their involvement in cover pricing before the ruling. The OFT has dropped bid rigging investigations into nine companies due to lack of evidence.

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