Price Fixing - Construction Firms Fined £100m

The Office of Fair Trading’s (OFT) enquiry into price-fixing in the construction industry has now been completed and it has been announced that 103 firms are being fined a total of more than £129 million for participating in anti-competitive behaviour. 199 bids were investigated, representing £200 million worth of public contracts. This makes the average fine approximately £650,000 per contract. The fines were reduced for 86 of the firms because they admitted their role in the illegal practices.

The main source of collusions between firms was the practice of ‘cover pricing’ where tenders are submitted at artificially high prices by firms who do not want to win them, enabling the firm that does to submit a higher tender bid than they would be willing to accept for the contract on offer. Sometimes the ‘unsuccessful’ bidders are compensated by the ‘winner’ by the making of a payment.

The fines are an indication of the seriousness with which the OFT takes such matters. The UK has strict anti-competition laws and can fine businesses that transgress them up to 10 per cent of turnover – a potentially cataclysmic sum. In this case the average fine represents just more than one per cent of the firm’s annual worldwide turnover.


OFT Press release