OFT finds buyers are better at battling bid-rigging

29 June 2010

29 June 2010 | Andy Allen

Roughly two-thirds of procurement departments have introduced new processes in the past two years to detect or prevent anti-competitive practices.

According to a survey of construction contractors and buyers by the Office of Fair Trading (OFT) comparing awareness and understanding of competition law in 2008 with 2010, the industry is now much more aware bid-rigging is a serious offence.

It follows the OFT’s decision to fine 103 construction firms a total of £129.5 million for their part in a bid-rigging scandal in 2009. The regulator found the building firms were engaged in illegal, anti-competitive activity on 199 contracts from 2000 to 2006.

The most common mechanisms deployed to fight corruption are closed bids, post-bid tender evaluations and making bidders declare in tender application forms that they are not colluding, the survey said. Only 35 per cent of contractors have equivalent mechanisms in place.

According to the regulator nearly nine out of 10 construction firms now recognise that bid-rigging, including cover pricing, is a serious breach of competition law. Cover pricing is the practice where competing contractors collude to fix a high price for a deal, leaving buyers with a false impression of competitiveness. Three-quarters of contractors are now aware they can be fined as a penalty for cover-pricing, compared to less than half in 2008.

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