The Office of Fair Trading ("OFT") today issued a Statement of Objections to 112 firms in the construction sector in England for alleged breaches of the Competition Act 1998. These provisional findings follow one of the largest ever competition investigations in the UK.
The OFT are alleging that the companies involved have been engaged in bid rigging through the practice of cover pricing. A cover price is one which is provided to the bidder by a competitor and appears to be competitive but which is high enough to ensure that the party submitting it will not win the work. In effect, it is not a genuine, competitive bid and as such it constitutes bid rigging.
It is also alleged that "a minority" of the companies were involved in arrangements for the payment of compensation (or losers' fees) to the unsuccessful bidders. Such arrangements are a serious form of bid rigging.
The investigation has focused on general building work carried out for public and private sector clients including the construction of housing, commercial and industrial construction. It is understood that some of the projects concerned tenders for schools and hospitals. During the course of its enquiries, the OFT carried out on-site inspections at the premises of 57 firms and of those implicated in the investigation, 37 have applied for leniency with a further 40 accepting the offer of a reduced financial penalty in return for their cooperation.
Each of the firms will now have the opportunity to respond to the case against them before the OFT finalises its decision. If found guilty, the OFT has the ability to impose a fine on each firm of up to 10% of that firm's turnover.
The OFT has consistently stressed that the construction industry is one of its priority areas for investigation and today's announcement confirms the seriousness with which the OFT views suspected anti-competitive behaviour.
MacRoberts has extensive experience in dealing with cartel investigations and leniency applications. Immediate specialist help is imperative when dealing with the OFT to ensure that your interests are fully protected. We also offer full competition law training, compliance and audit services to help you comply with the rules and identify any instances of non-compliance.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.