REUTERS | Toby Melville

OFT fines 103 construction companies for bid-rigging

The long-awaited results of the OFT‘s investigation into bid-rigging in the construction industry have been published.

The fines

The OFT has imposed fines totalling £129.5 million on 103 construction companies in England that it found had colluded with competitors on building contracts.

The largest fine is £17.9 million, the smallest just £713 (the average fine is £1.26 million). 86 companies have received reduced penalties because they admitted their involvement in cover pricing prior to the decision. Companies will be allowed to pay the fine by instalments over three years, because of the current economic climate.

OFT senior director, Simon Williams, said:

“This decision sends a strong message that anti-competitive and illegal practices, including cover pricing, must cease.”

The largest fines include:

  • Kier Regional Ltd and Kier Group plc: £17.9 million.
  • Interserve Project Services Ltd and Interserve plc: £11.6 million.
  • Ballast Nedham NV: £8.3 million.
  • Try Accord Limited, Galliford Try Construction Limited and Galliford Try plc: £8.3 million.
  • Bowmer & Kirkland Ltd and B & K Property Services Ltd: £7.6 million.
  • Concentra Ltd, Durkan Ltd and Durkan Holdings Ltd: £6.7 million.
  • John Sisk & Son Ltd and Sicon Ltd: £6.2 million.
  • Connaught Partnerships Ltd and Connaught plc: £5.6 million.
  • Carillion JM Ltd: £5.4 million.
  • Balfour Beatty Construction Ltd, Balfour Beatty Refurbishment Ltd, Mansell Construction Services Ltd and Balfour Beatty plc: £5.2 million.

The industry reacts

The UK Contractors Group (UKCG) has condemned the fines:

“These fines could not have come at a worse time for the industry and are unfair. The industry is going through its sharpest downturn on record… These punitive fines will be hard to absorb and will cost jobs.”

The National Federation of Builders has also been critical of what it describes as a small, random sample of companies fined.

Balfour Beatty said it had co-operated with the investigation and had:

“…carried out a thorough and detailed audit of all its businesses to ensure that it is fully compliant with all aspects of competition law… developed and implemented a comprehensive and detailed training and education programme for all key employees…”

Carillion announced that it had:

“…taken steps to apply its own procedures within Mowlem to ensure that Mowlem complied with the requirements of the Competition Act 1998, to which Carillion attaches the highest importance.”

Galliford Try said it:

“…has in place a comprehensive competition law compliance policy and procedures to ensure it does not engage in anti-competitive activities, including cover pricing… [and] has also adopted the… code of conduct for the construction industry promoted by the UK Contractors Group.”

What next?

The OFT is recommending that the 103 construction companies are not excluded from future tenders, or subject to other measures that would make it difficult to qualify for tenders. It has been reported that the director of the UKCG, Stephen Radcliffe, has also written to all public sector clients to try and prevent future blacklisting of firms, because of this investigation.

Separately, in a bid to combat anti-competitive activities in the industry, a new code of conduct has been launched by the UKCG and National Federation of Builders, with Construction News.

7 thoughts on “OFT fines 103 construction companies for bid-rigging

  1. Stephen Blake, cartels director at the OFT, has described the fines as “perfectly reasonable” and has warned the construction industry that it now needs to “put its house in order”. He also warned that any companies implicated in cover pricing activities in the future “can expect high penalties”.

  2. It has been reported that a number of the companies fined by the OFT are considering appealing the decision. If they choose to do so, under the Competition Act 1998 they can appeal to the Competition Appeal Tribunal (the CAT). An appeal must be filed with the CAT within 2 months of the OFT’s decision.

    At the same time, it has also been reported that the companies found guilty by the OFT may be the subject of black-listing, despite the OFT issuing guidance against this. If this happens, it will be a double-whammy for companies who have already seen profit eaten up by the OFT’s fine.

  3. Construction News has reported that local authorities are changing their tender documents, and retendering some schemes, as a result of the OFT investigation. One local authority source is quoted saying:

    “We revised our ‘invitation to tender’ documents, making it clear that if we become aware of any anti-competitive behaviour such as cover pricing, the firms concerned will be struck off our approved list and we will report them to the OFT or the police, or both.”

  4. Building reports that Leeds Council has confirmed that it is pursuing contractors who submitted cover prices to the Council, hoping to recover losses suffered by the Council.

    If the initial steps taken by this Council (or any others) lead to court action, it will be interesting to see how the Council quantifies its losses.

  5. The OFT has published the non-confidential version of its 1,945-page decision and seven companies have lodged appeals with the Competition Appeal Tribunal (CAT). See our Legal update for more information.

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