OFT comes down hard on alleged rigged building bids
Twenty construction firms that failed to blow the whistle on an allegedly rampant £3 billion bid-rigging scandal will face fines and possible criminal prosecutions, The Times has learnt.
The Office of Fair Trading (OFT) will announce today that it has raided 57 companies, including some of the country’s biggest construction firms. Of them, 37 applied for leniency for giving information to OFT officials. The OFT is informing the rest that their chance of winning leniency has passed.
An inquiry that began in the East Midlands has spread to other parts of England and OFT officials describe it as the biggest UK cartel investigation in history. Officials have uncovered evidence of bid-rigging in thousands of tenders for public sector and private contracts, leaving taxpayers and private companies potentially short-changed.
Company directors found guilty of anti-competitive behaviour can be jailed for five years. Companies can be fined 10 per cent of their worldwide turn-over. Bid-riggers typically pay money to rival companies to stay out of tenders or put in unrealistically high bids. In some cases construction companies operate a so-called “slate system”, in which they divide up contracts among themselves.
The OFT believes that the construction industry is rife with malpractice and has been targeting it for some years. In 2004 it found nine roofing contractors guilty of collusion and fined them almost £300,000. It made four further findings of bid-rigging in the roofing industry, imposing aggregate penalties of £4 million.
The OFT has decided that its evidence of collusion is good enough to put a halt to offers of leniency, although it may still consider requests in the most serious criminal matters. It is also still offering leniency to companies involved in bid-rigging that have not yet been implicated in existing inquiries.
The original East Midlands investigation has been extended in particular to Yorkshire, Humberside and neighbouring areas, although evidence of bid-rigging has also been found elsewhere. The allegedly rigged bids were in the private sector as well as in the public sector and involved new build, repairs, maintenance and improvement. The rigged tenders amounted in aggregate to £3 billion.
Under new Competition Act powers, OFT officials have launched surprise raids, demanding paperwork and seizing computers. For the first time, they have used forensic science analysis of documents where attempts have been made to conceal evidence.
The OFT’s most successful anti-cartel clampdown has been against makers and retailers of replica football shirts. It fined ten companies, including Manchester United, JJB Sports and the Football Association, £18.6 million in total for price fixing. Some of the fines were reduced on appeal.