UK: OFT Fines 103 Construction Companies For Breach Of Competition Law

Last Updated: 2 November 2009
Article by Ian Mason and Sheila Tormey

On 22 September 2009, the Office of Fair Trading (OFT) brought its five year investigation into bid-rigging in the construction industry to a conclusion, imposing fines of £129.5 million on 103 contractors. The highest individual fine of close to £18 million was imposed on Kier Regional Limited and its parent company, Kier plc.

The OFT's findings primarily relate to the practice of "cover pricing", where a bidder arranges for a competitor or competitors to submit artificially high bids. The OFT found that this practice gives a misleading impression to customers as to the real extent of competition and considers it to be a form of bid-rigging. Contractors have argued that the intention of cover pricing was to stay on the list for future tenders, rather than to overcharge for contracts.

The OFT also found that, in six cases, successful bidders made compensation payments (or losers' fees) to unsuccessful bidders. These payments ranged from £2,500 to £60,000 and were made by raising false invoices. The OFT considers this practice to be a more blatant breach of competition law than cover pricing.

The investigation, prompted by a complaint in the East Midlands in 2004, related to local authority contracts for schools and hospitals and private sector contracts for apartment blocks. The OFT stated that it actually uncovered evidence of cover pricing in over 4,000 tenders involving over 1,000 companies but that, for practical reasons, it narrowed its investigation to 199 contracts entered into between 2000 and 2006. In April 2008, it issued a statement of objections to 112 firms. It subsequently dropped its allegations against nine of these due to insufficient evidence. Eighty six of the 103 firms fined received reductions in their penalties because they admitted their involvement and co-operated with the OFT. This investigation is one of the most complex in the OFT's history and the OFT gathered much of the evidence by carrying out "dawn raids" on the contractors.

Fines are normally payable within two months, but the OFT announced that, given the current economic climate affecting this industry, exceptionally it is offering all parties the option of payments by instalments over three years.

Under competition law, parties have two months from the date of decision to lodge appeals before the Competition Appeals Tribunal and numerous parties are reported to be considering this option. In addition, local authorities or other procuring entities which have incurred losses as a result of the infringements identified by the OFT can seek damages from the contractors involved.

In consultation with the Office of Government Commerce, the OFT has issued a notice to local authorities and other procuring entities recommending that these contractors should not be automatically blacklisted from future tenders on the grounds of this decision. Given the original much wider scope of its investigation, the OFT has stressed that it should not be assumed that those contractors which are named in its decision are the only companies that have engaged in cover pricing. Further, the parties in question have been penalised for their conduct and, if anything, should now be more likely to comply with competition rules in the future.

Is your business compliant?

The scale of this investigation and the magnitude of fines imposed serve as a reminder that it is essential for businesses to be aware of, and comply with, competition law. Whilst it is impossible to eliminate all competition law risk, this can be minimised through a well designed competition law compliance programme. Further, the OFT has stated that a compliance programme may be taken into account as a mitigating factor in the case of an infringement when the OFT is calculating penalties.

Compliance programmes need to be tailored to individual companies but should comprise the following elements:

  1. Assess your level of competition law risk. Do you operate in a concentrated market with few competitors? Do your staff have regular contact with competitors, perhaps through a trade association? Are your staff aware of their obligations under competition law?
  2. Establish a competition law compliance policy, backed by senior management. This can be a brief statement that the company takes its obligations under competition law seriously and complies with competition law in all aspects of its business. However, it is essential that senior managers support this and that staff know that compliance is a priority.
  3. Establish document management policies (what to retain, what to destroy and when).
  4. Train relevant staff and ensure that they have access to legal support.
  5. Evaluate the programme on a regular basis.

If the worst happens, and you face an investigation, how you respond is very important in terms of the likely sanction. Full co-operation will earn credit and a reduced sanction. An ineffective response to the investigation could aggravate the situation and result in a higher penalty.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.