Bid-rigging building suppliers get hefty fines

21 September 2009

22 September 2009 | Jake Kanter

The Office of Fair Trading (OFT) has fined 103 construction firms a total of £129.5 million for their part in bid-rigging scandals.

It found the building firms were engaged in illegal, anti-competitive activity on 199 contracts from 2000 to 2006. The OFT said this was mostly in the form of "cover pricing", where competing contractors collude to fix a high price for a deal, leaving buyers with a false impression of competitiveness.

The firms were hit with average penalties of £1.26 million, but 86 of the 103 companies received reduced fines after admitting involvement.

Nine companies originally listed in the OFT's Statement of Objections last year escaped penalties because there was insufficient evidence against them. A full list of the companies fined can be accessed at http://tiny.cc/Nz9CA

The watchdog also found six instances where successful bidders paid an agreed fee to the unsuccessful bidder, known as a "compensation payment". These ranged from £2,500 and £60,000 and were made through false invoicing.

The bid-rigging affected building projects in England worth over £200 million, including schools, hospitals and private projects.

The OFT told public sector buyers not to automatically exclude guilty suppliers from future tenders, but urged them to monitor bidding processes closely for anti-competitive behaviour.

Simon Williams, senior director for the case at the OFT, said: "Our investigation has uncovered significant infringements of competition law on nearly 200 projects across England. Bidding processes are designed to ensure clients and in many cases taxpayers receive the best possible choice and prices were distorted, creating a real risk of increased prices."

LATEST
JOBS
Swindon, Wiltshire
upto £40K base (+ Paid overtime and corporate benefits)
Honda Manufacturing Ltd
Kew gardens, Richmond upon Thames, London (Greater)
£37,000 - £42,500 per annum pro rata, depending on skills and experience
Kew Royal Botanic Gardens
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE