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OFT seeks firms' help in crack-down on cartels
15:53 15 Feb 2005
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The Office of Fair Trading (OFT) is encouraging products firms to rat on their competitors in an attempt to crack down on cartels.
Lawyers have warned that the OFT is targeting manufacturers and contractors, and that
its inspectors will be making dawn raids on suspected offenders.
An OFT spokesman said the department will encourage leniency programmes. "We make no bones about it - it is a very good way to break up cartels.
"Bid rigging is a problem in the construction sector as a whole. We do run a successful leniency programme, and if companies withdraw from a cartel early enough, we're happy to speak to them on a no-names basis. It's a good way to get people to come in."
Under new laws introduced last year, firms can face fines of 10% of their turnover and directors can serve up to five years in prison or 15 years disqualification if found to be operating as part of a cartel.
Pinsent Masons partner in EC and competition law Alan Davis said the OFT considers cartels to be widespread in the construction products sector, after successful campaigns against window materials and roofing firms last year.
Davis said: "As a result of other complaints, the OFT believes these types of collusive activities are endemic in the industry.
"It's likely to result in an increase in scrutiny, resulting in dawn raids. The OFT can go to the homes of directors and employees, interview management and staff, and search premises. It can basically do what it wants to help in its investigations."
Davis said attitudes in the construction products sector put firms at risk. "Certainly the attitude from some people in the sector is, 'yes this is the way things are done'.
"This doesn't hold any sway with the OFT. The industry has particular views on how things are done and that does clash with competition authorities."
The OFT spokesman urged companies to avoid uncompetitive bids: "We're not saying companies shouldn't talk to each other, but if it's subverting the normal bidding process they should avoid it."
Lawyers have warned that the OFT is targeting manufacturers and contractors, and that
its inspectors will be making dawn raids on suspected offenders.
An OFT spokesman said the department will encourage leniency programmes. "We make no bones about it - it is a very good way to break up cartels.
"Bid rigging is a problem in the construction sector as a whole. We do run a successful leniency programme, and if companies withdraw from a cartel early enough, we're happy to speak to them on a no-names basis. It's a good way to get people to come in."
Under new laws introduced last year, firms can face fines of 10% of their turnover and directors can serve up to five years in prison or 15 years disqualification if found to be operating as part of a cartel.
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Pinsent Masons partner in EC and competition law Alan Davis said the OFT considers cartels to be widespread in the construction products sector, after successful campaigns against window materials and roofing firms last year.
Davis said: "As a result of other complaints, the OFT believes these types of collusive activities are endemic in the industry.
"It's likely to result in an increase in scrutiny, resulting in dawn raids. The OFT can go to the homes of directors and employees, interview management and staff, and search premises. It can basically do what it wants to help in its investigations."
Davis said attitudes in the construction products sector put firms at risk. "Certainly the attitude from some people in the sector is, 'yes this is the way things are done'.
"This doesn't hold any sway with the OFT. The industry has particular views on how things are done and that does clash with competition authorities."
The OFT spokesman urged companies to avoid uncompetitive bids: "We're not saying companies shouldn't talk to each other, but if it's subverting the normal bidding process they should avoid it."
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