|Building companies fined £129.5million|
Some of the UK's leading building companies have been handed big fines by the Office of Fair Trading (OFT) for rigging bids for contracts. In total, the OFT has fined 103 firms resulting in a £129.5million worth of of fines or colluding with competitors on building contracts. The fines were largely for the practice known as "cover pricing"; where building firms submit quotes for the job hat are not actually priced to win the contract, so the client gets a misleading idea about the real extent of competition.
It is believed that the firms colluded among themselves during the bidding process, leading to customers, such as local authorities, having to pay too much. The ruling comes at the end of a five-year investigation by the OFT.
Of those that were fined, Kier Group was charged with £17.9million - which was more than any other building company.
Interserve was fined £11.6million, while other companies fined more than £5million were Galliford Try, Ballast Nedam, Bowmer & Kirkland, ISG Pierce and Crest Nicholson, John Sisk & Son, Connaught, Carillion JM, Concentra and Durkan Holdings, and Balfour Beatty.
Balfour Beatty was fined £5.2million for practices that took place at subsidiary Mansell before its acquisition.
"In light of the investigation, Balfour Beatty carried out a thorough and detailed audit of all its businesses to ensure that it is fully compliant with all aspects of competition law," it said in a statement.
Carillion, which was fined £5.4m, said its punisihment related to contracts tendered by Mowlem, which it bought in. In addition, Galliford Try, fined £8.3m, said it was that it was not found to have made any financial gain, and the eventual price paid by the client had not increased.
Alan Ritchie, general secretary of construction union Ucatt, said: "It is clear that construction companies can't be trusted to run their affairs properly.
"A zero tolerance approach must be taken with the construction industry to ensure that companies follow the law."
In 11 instances investigated by the OFT, the body found that the lowest bidder faced no competition because all other bids were cover bids.It also found six instances where successful bidders had paid an agreed sum of money to the unsuccessful bidder. These payments were between £2,500 and £60,000 and were made using false invoices.The infringements affected building projects across England worth in excess of £200m, including schools, universities and hospitals, between 2000 and 2006.
The OFT said that 83 out of the 103 firms had received reductions in their fines because they had already admitted the practice.
"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." said Simon Williams at the OFT.