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Building Companies Fined £129.5m

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http://news.bbc.co.uk/1/hi/business/8268116.stm

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.

The OFT has fined a total of 103 firms £129.5m for colluding with competitors on building contracts.

It said 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.

'Unfair'

The fines were largely for the practice known as "cover pricing".

This is where building firms submit quotes for jobs that are not actually priced to win the contract, so the client gets a misleading idea about the real extent of competition.

The process will often involve builders disclosing to one another what price they intend to quote.

The UK Construction Group, which represents 29 contractors, called the decision to penalise the firms "unfair".

"Everybody knows - including the OFT - that cover pricing was widespread in the industry in the past," said the body's director Stephen Ratcliffe.

"It is perverse and unfair to impose such disproportionate penalties on a small number of contractors selected by geographical sampling."

Adam Aldred, competition partner at law firm Addleshaw Goddard, which represents five of the firms investigated, said the OFT was the first competition authority in Europe to rule against building firms for the practice of cover pricing.

'Price distortions'

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," said Simon Williams at the OFT.

"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."

One of the companies fined by the OFT was Mansell, a subsidiary of Balfour Beatty, one of the UK's largest construction groups.

Mansell was fined £5.2m for practices that took place before its acquisition by Balfour, the company said.

"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

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Complete and utter BULL SHEET!!! The main reason imho why the public sector get so many cover bids back is a problem entirely created and perpetuated by the bureaucracy, red tape and processes and procedures manual that the public sector is unable to deviate from.

*Turn the swear filter off you fascist swines*

Edited by Concrete Jungle

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