Bid-rigging contractors fined £129.5m

The OFT has imposed fines totalling £129.5m on 103 construction firms found to be involved in anti-competitive practices including bid-rigging and cover pricing.

Kier received the largest fine at £17.9m, followed by Interserve at £11.6m. Heavy fines also went to Galliford Try, fined £8.3m; Ballast Nedam fined £8.3m and Bowmer & Kirkland fined £7.5m.

• View the full list of companies fined
• Read the OFT's summary of infringements
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• More coverage on our bid-rigging page

The OFT said the firms engaged in illegal anti-competitive bid-rigging activities on 199 tenders from 2000 to 2006, mostly in the form of 'cover pricing'.

Nine firms originally listed in its Statement of Objections were told that the OFT will not pursue allegations of bid-rigging against them because of insufficient evidence.

The cleared firms are: Adonis Construction; Chase Norton Construction, including parent Chase Midland; E.G. Carter, Frank Galliers, George Law together with parent company Bosworth & Wakeford, J. Guest, Piper Construction (Midlands) together with parent company Piper Securities; Robert Bruce Construction and Spicers (Building) .

It said it had uncovered six instances where successful bidders had paid an agreed sum of money to the unsuccessful bidder. These "compensation payments" varied between £2,500 and £60,000 and were arranged through false invoices.

Building projects across England worth in excess of £200m were hit with cover pricing bids. These included schools, universities hospitals, and numerous private projects from the construction of apartment blocks to housing refurbishments.

Eighty-six out of the 103 firms have received reductions in their penalties because they came clean about their involvement.

The practice of cover pricing sees one or more bidders in a tender process obtains an artificially high price from a competitor

Such cover bids are priced so as not to win the contract but are submitted as genuine bids, which gives a misleading impression to clients as to the real extent of competition. This distorts the tender process and makes it less likely that other potentially cheaper firms are invited to tender.

In 11 tendering rounds, the lowest bidder faced no genuine competition because all other bids were cover bids, leading to an even greater risk that the client may have unknowingly paid a higher price.

Simon Williams, the OFT's senior director for this case, said: "This decision sends a strong message that anti-competitive and illegal practices, including cover pricing, must cease.

"The OFT welcomes initiatives by the leadership of the construction industry to add weight to that message through a clear compliance code which we hope will help to embed more fully a culture of competition within the construction sector."