Bid-rigging: Secret club exposed

Contractors have been meeting to fix prices in a series of shady get-togethers known as the "Calorie Club".

The gathering was given its bizarre nickname because "everyone gets fat at the Calorie Club".

CJ can reveal that the club specialised in fixing bids and drawing-up cover prices in the public sector - mainly on residential jobs.

The activities of the group are believed to form a major part of the current Office of Fair Trading probe into construction.

One contractor said: "The Calorie Club was well known in the industry as a place where firms could get together and discuss work and prices. We were invited to come along a few times, but our speciality is private housing and the club was mainly concerned with divvying-up public housing jobs."

The group was active mainly throughout the South East and ceased meeting several years ago when local authority procurement practices started to change.

The club would meet in restaurants, hotels or bars and consisted of a core group of members, with other firms invited to join on an occasional basis.

Another contractor said: "It was held in a different place every time. There were about eight contractors involved regularly, including some big names."

He added that the group's attempts to fix prices often came to nothing because club members would cheat on each other. The source said: "You had a number of contractors sitting around the table discussing potential jobs and setting prices. But there was always a rogue firm that would go in after the talks with a lower price than the agreed level and win the job."

The OFT declined to comment on whether the club's activities formed part of its cover-pricing probe. A spokeswoman said: "We would not feel comfortable about publicly revealing that level of detail."

The OFT has named 112 firms in its Statement of Objections against the industry detailing allegations of cover-pricing. Nine of the firms are also believed to be accused of the more serious charge of offering compensation payments to losing bidders.

Companies have until June 30 to respond to the allegations and 37 firms have already admitted some form of bid-rigging and have applied for leniency.

Secrecy surrounding the 1,700 page Statement of Objections is tight after the OFT warned contractors that showing it to third parties is illegal.

A spokeswoman said: "We have advised companies involved that disclosure of the document could constitute an offence under the Enterprise Act."