OFT urges purchasers to blow whistle on cartels

17 March 2005
More legal news

17 March 2005 | Cara Whitehouse

Purchasers are pivotal in the fight against price-fixing and bid-rigging and should speak out, the Office of Fair Trading (OFT) has urged.

The call comes as the OFT steps up investigations into dubious contract awards in five areas, including public procurement.

"If purchasers do have their suspicions, they should alert the OFT," a spokesman told SM. "If competition and price variety [in deals] suddenly disappear, or if the pattern of bidders change, it could be an indicator of fraud."

The OFT is to focus investigations on the construction sector, which it says has "significant problems" in the supply chain.

At the end of last month, a Competition Appeal Tribunal upheld the OFT's decision that two roofing contractors in the West Midlands had, along with seven others, agreed to fix prices on repair, maintenance and improvement services by collusive tendering.

OFT chairman John Vickers said the ruling against the group "is likely to be the first in a series of construction cartel cases".

Stephen Jones, procurement manager at Lafarge Roofing, agreed that procurement professionals are in a good position to detect fraud, but warned that it is not always easy to spot.

He told SM: "Buyers must understand the breakdown of costs before assuming corruption. If one supplier goes to market with cost increases, others will follow.

"It may look suspicious when actually it is a simple response to price pressure across the industry."

Jane Gibbs, supply chain director at Rok Property Solutions and CIPS vice-president, cautioned that the onus can't be on purchasers to help stamp out fraud.

"Buyers do look for corruption, but in many cases, the power is with the supplier," she said. "Security of supply is vital and that is a purchaser's priority."

She said purchasers, if they have their suspicions, can change suppliers but they should not be a "lone voice" against corruption.

  • Purchasers who suspect a cartel is operating can call the OFT cartel hotline 020 7211 8888


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