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Media Releases
2008

17 April
2008

Construction Firm Bosses Could Face Criminal Charges for Anti-Competitive Behaviour

The bosses of 112 construction firms accused today by the Office of Fair Trading (OFT) of rigging bids for contracts could face criminal charges, according to competition law expert John Schmidt of Shepherd and Wedderburn.

The bosses of 112 construction firms accused today by the Office of Fair Trading (OFT) of rigging bids for contracts could face criminal charges, according to competition law expert John Schmidt of Shepherd and Wedderburn.

The OFT alleges the firms had colluded among themselves while bidding for contracts. This resulted in customers such as local authorities being overcharged for projects.

The authority claimed there were cases where companies which successfully tendered for contracts paid money to those who lost out.

The OFT also said construction firms’ anti-competitive practices involved the use of false invoices.

Schmidt said this could be classed as fraudulent activity. He added: "Criminal sanctions are a possibility and the OFT has in the past made it clear that it will use its criminal powers in extreme cases. This could well be such a case."

The OFT said 40 firms have admitted price fixing, while 37 had applied for leniency. Schmidt added: "At this stage the regulator has put forward its Statement of Objection which is not the final decision.

"However, given that many firms have agreed to co-operate with the OFT, it is highly likely that fines will ultimately be imposed.

"This case makes it absolutely clear how serious the authorities take bid rigging and it will clearly have repercussions within the construction industry.

"It is also a warning for other industries to ensure that price fixing or bid rigging does not take place. Nobody will be able to plead ignorance in future."

Schmidt added the case highlights an increasing trend for firms to admit to anti-competitive activities. He said: "On a more positive note, the case shows how companies can clean up their act; they can obtain leniency in return for whistleblowing on such activities."

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