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OFT raps bid-rigging firms

The UK’s competition watchdog today fined 103 construction firms a total of £129.5 million after an investigation into illegal “bid-rigging”.

Several major companies - including Balfour Beatty and Carillion - are among those listed by the Office of Fair Trading (OFT) as having colluded with competitors on building contracts.

The OFT said it had detected bid-rigging activities on projects across England worth more than £200 million, including schools, hospitals and apartment blocks.

The OFT said it had found 199 tenders dating from 2000 to 2006 where bid-rigging took place.

This was mostly in the form of so-called cover pricing, where one or more bidders arranges for competitors to put down high bids so as not to win the contract but to increase the appearance of competition.

“This distorts the tender process and makes it less likely that other potentially cheaper firms are invited to tender,” the OFT said.

It added that in 11 instances the lowest bidder faced no genuine competition at all as all other companies involved in the tender had put down cover bids.

The OFT warned that today’s revelation could be just the tip of the iceberg, with the practice of cover pricing described as “widespread and endemic” in the construction industry.

This was posted in Bdaily's Members' News section by Ruth Mitchell .