OFT issues ultimatum to bid-rigging builders

The Office of Fair Trading (OFT) has issued an ultimatum to construction companies implicated in its two-year-old investigation into bid rigging cartels - cooperate in return for a reduced fine or face significant financial penalties.

The warning came as the OFT warned that the opportunity for companies to apply for leniency had already passed, making the offer a reduced penalty the only way to avoid the full force of any potential punishment arising from a successful prosecution.

A business found to be part of a cartel can be fined up to 10% of its worldwide turnover. 

The OFT revealed that it had so far raided 57 companies, uncovering evidence of bid rigging on thousands of tenders, with a combined estimated value approaching £3bn. It indicated that 37 of the 57 firms had already asked for leniency.

It said it had uncovered evidence of cover pricing, whereby companies obtain a price from a competitor that is not designed to win the contract but is intended to give the appearance of competition.

It also indicated it had come across some instances of compensation payments or 'bungs' being passed between competitors in exchange for a cover price.

The investigation, which has mainly focused on the East Midlands, Yorkshire and Humberside areas in activities up to 31 December 2006, was said to be the first of its kind to have involved digital evidence gathering for the first time, in order to find electronic evidence held on computers.