Following one of its biggest Competition Act investigations, the OFT has fined 103 construction firms in England £129.5 million for their involvement in the bid-rigging of 199 construction contracts. The OFT concluded that the parties had engaged in illegal anti-competitive conduct by making artificially high bids which were not intended to win the contract (known as “cover pricing”). Cover pricing gives the contracting party a distorted impression of the level of competition in the market. In some cases, the unsuccessful tenderer was subsequently paid a “compensation payment” by the winning bidder of up to £60,000. The infringements affected 200 construction projects to the value of £200 million, including building works to schools and hospitals and housing refurbishments across England.
The OFT reduced the fines applied to 86 of the firms by a total of £64.9 million under its leniency programme, fast track policy and following admissions of illegal conduct made by 12 firms after receipt of the OFT’s Statement of Objections. Interestingly, the OFT has also decided to allow all of the undertakings to make payments in instalments to avoid dealing with large numbers of requests to do so as a result of the current economic climate. The full decision will be published later this year but in the meantime, the OFT has issued a note in conjunction with the Office of Government Commerce recommending how to deal with tenders submitted by firms who have been found by the OFT to have been involved in bid rigging activities (in particular recommending that these firms be allowed to participate in future tenders).