UK developers guilty of bid-rigging(2)

The construction firms have been penalised a combined £129.5m by the UK’s Office of Fair Trading for illegally colluding on infrastructure and construction projects between 2000 and 2006. The OFT said 86 of the firms had their fines reduced in return for admitting their involvement in the bid-rigging.

Over 100 construction firms based in the UK, some of whom are involved in major infrastructure projects worldwide, have been found guilty of illegal bid-rigging.

Consumer and competition authority the Office of Fair Trading (OFT) has imposed fines totalling £129.5 million (€144 million; $213 million) on the 103 firms, which had colluded with competitors on works contracts in England.

Verdict: 103
firms fined

The collusion, which took place between 2000 and 2006 across almost 200 competitive tender processes, largely took the form of “cover pricing”. This is where bidders in a tender process obtain artificially high prices from competitors, sometimes in return for a cash payment to the losing bidder.

The infringements impacted projects with a combined value of over £200 million, including school, university and hospital schemes, in addition to other construction projects.

Kier, a construction group which is involved in a number of PPP and infrastructure schemes, was hit with the biggest fine. It has been forced to pay a penalty of £17.9 million.

Other recipients of big fines include Interserve Project Services (£11.6 million), Ballast Nedam (£8.3 million), Try Accord and Galliford Try (£8.3 million), Bowmer & Kirkland (£7.6 million), Durkan Pudelek (£6.7 million), John Sisk & Son (£6.2 million), Connaught Partnerships (£5.6 million), Carillion (£5.4 million) and Balfour Beatty, through its subsidiary Mansell (£5.2 million).

The OFT’s senior director for the case Simon Williams said of the ruling: “Our investigation has uncovered significant infringements of competition law on nearly 200 projects across England. 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.”

The OFT said 86 of the firms had their fines reduced in return for admitting their involvement in the bid-rigging.

However, construction unions have described the fines as lenient. Despite having the power to fine companies up to 10 percent of their annual turnover, the 103 companies in this case were penalised an average of 1.14 percent of their sales.