Construction firms urged to prepare for OFT attack

Companies in the construction and housing sectors are being urged to review their practices and procedures to ensure they are ready if targetted for anti-competitive behaviour by the Office of Fair Trading (OFT).

From the start of the year, both sectors were singled out for closer scrutiny by OFT meaning firms, and suppliers of goods and services to them, are now more liable to unannounced dawn raids, investigations and potentially time-consuming information requests.

It has prompted law firm Pinsent Masons to warn that as the action will no longer be just a one-off check-up, but part of an ongoing system of regular reviews and staff education to ensure compliance with the competition rules, firms must know their rights.

Guy Lougher, head of competitive practice, said: “For those companies that have infringed the competition rules and who are at the centre of an investigation or at risk of being investigated, the option to apply for leniency should be considered, which may result in reduced or zero fines.

“This testimony would then be used as evidence in enforcement actions by OFT against other companies that had breached the competition rules.

”Companies must weigh very carefully the pros and cons of seeking leniency, but invariably they need to reach a decision quickly and without necessarily knowing what information OFT really has about them,” he said.

“Reaching a decision against this background requires considerable judgment and experience.”

Under the Enterprise Act 2002, OFT is required to identify its main priorities and objectives for the financial year ahead.

During 2005 it will have five priority areas on which it will focus its competition enforcement.

Two will have an immediate impact on the construction industry - agreements and behaviour in the construction and housing markets, and the interaction between government and markets such as that delivered through public procurement.

According to the plan: “Construction and housing markets … form a significant part of the workload of the cartels branch. They are of prime importance in many large public procurement exercises.”

OFT says it is responding to increased public concern about standards in the sector, reflected in a series of recent cases, which have led it to target the construction industry.

Last year, OFT fined nine roofing contractors more than £300,000 for colluding to fix prices in local authority tenders.

And in December the Serious Fraud Office announced an investigation into how construction contracts were regularly awarded to the same company in relation to an NHS hospital in Nottingham.