OFT gets tough with bid-rig contractors

The Office of Fair Trading (OFT) is set to take a tougher stance with contractors engaged in bid-rigging: rather than issuing heavy fines, it is considering criminal prosecutions.

At a leniency conference held at the OFT’s office last week, representatives from nearly 40 law firms were told by the department that contractors have been given enough time to understand that coming forward under leniency rules is the best option and that criminal action is now a strong possibility.

“The mood has definitely changed within OFT,” said one legal expert. “The department has become very disappointed by the number of companies coming forward under leniency rules to root out bid-rigging. Although it is not set in stone that criminal prosecutions will become the norm, I think we can expect criminal action imminently.”

The OFT was given new powers to proceed with criminal prosecutions in June 2003 under the Enterprise Act. Powers include unlimited fines, disqualification of directors and up to five years’ imprisonment for employees.

The OFT has yet to invoke these powers, but many who attended the conference believe it is only a matter of time before it does.

Another legal source told CJ: “The OFT now believes that criminal action is the only option to deal with more regional bid cartels as companies are unlikely to come forward with information as they live in close proximity to rival firms and fear retaliation. In these situations, the OFT believes that offering leniency
is useless.”

Alan Davis, partner at law firm Pinsent Masons, said: “The OFT has now given some indications that it may well bring criminal prosecutions against local or regional cartels in the UK even where the value of the contracts is relatively small. 

“The OFT’s powers and its determination to stamp out anti-competitive practices should not be underestimated - now is the time for contractors to take steps to ensure that they are complying with the competition rules. If relevant, they should also consider making a leniency application to ensure immunity from penalties and criminal prosecution.”

Perversely, the OFT has extended leniency (100% discount on fines and immunity for employees) to firms who come forward with information immediately after a dawn raid.

In the past leniency was only applicable to firms who blew the whistle on cartels before the OFT carried out investigations.