More than 100 construction firms fined over illegal 'bid-rigging'
Sep 22 2009 by Graeme Brown
Simon Williams, the OFT senior director on the case, said: "Bidding processes designed to ensure clients and, in many cases, taxpayers receive the best possible choice and price were distorted, creating a real risk of increased prices.
"This decision sends a strong message that anti-competitive and illegal practices, including cover pricing, must cease."
It welcomed a code of practice drawn up by the industry to ensure the message is reinforced.
The OFT investigation began after an auditor in Nottingham raised the alarm in 2004 and it "quickly became clear from the evidence that the practice of cover pricing was widespread".
Incidents covered in the investigation are mainly focused on the East Midlands, Yorkshire and Humberside regions.
The OFT said it does not have an estimate of how much extra the taxpayer and private organisations will have paid because of the bid-rigging.
Alan Ritchie, general secretary of construction union Ucatt, said: "It is clear that construction companies can't be trusted to run their affairs properly, the authorities should now put the construction industry into special measures. The cover pricing scandal demonstrates why the construction industry cannot be trusted to police itself.
"The cover pricing and blacklisting scandals demonstrate that a zero tolerance approach must be taken with the construction industry, to ensure that companies follow the law. If companies are prepared to corrupt the bidding process for public sector contracts, what else are they prepared to sanction in the quest for profits?
"The issue of bid rigging is very serious and has undoubtedly led to local authorities and the public sector paying over the odds for contracts. However it is ironic that the construction industry has received a multi million pound fine for cover pricing while they were let off with a slap on the wrist following the blacklisting scandal, where companies went out of their way to ruin workers lives."
Phil Davies, national officer of the GMB, said: "GMB has for years pointed out that contractors were colluding in price fixing, particularly for public sector work.
"These fines, derisory though they are, give clear evidence that much tougher legislation and stricter enforcement is needed to protect both public and private sector clients from the avarice of the 'suits' that run the construction contractors."
