The results of construction company appeals

A number of construction companies were successful in their appeal to the Competition Appeal Tribunal (CAT) to reduce the fines imposed by the Office of Fair Trading (OFT) in its “Bid rigging in the construction industry” decision. In September 2009, the OFT fined 103 construction companies for a cartel practice involving provision of a “cover price” when tendering for construction contracts. 25 companies appealed the fines, with the majority of appeals challenging the level of the fine imposed.  

In its judgments, the CAT concluded that there were errors in the way the OFT assessed the level of the fines. Consequently, it reduced the basic level of the fine. In addition, the CAT did not concur with the OFT’s massive increases to the level of the fine for deterrence purposes (Minimum Deterrence Threshold). As a result, in some instances, the fines were cut by as much as 90 per cent.

Nevertheless, the CAT made clear that its judgments should not be taken interpreted as indicating cover pricing is anything less than “a serious infringement of the competition law” and warned that “any future instances of this kind of infringement will be dealt with very firmly”. However, the CAT’s decision is likely to be a blow to the OFT and its fining practices.