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OFT fine appeals will focus on use of turnover

The Office of Fair Trading has pledged to stand by its decision to fine contractors found guilty of cover pricing according to their turnover rather than their profits, despite strong opposition from the industry.

In a 1,945-page breakdown of the reasons behind the £130 million stack of fines it handed down in September, the trading watchdog said it had “not been provided with a compelling reason to depart from a turnover-based approach in this case”.

But contractors, many of whom have launched appeal proceedings against their fines, have continued to argue that turnover is “no indication of financial strength”.

“Some parties suggested that the OFT should base its financial penalties on profit rather than turnover, noting that the parties in this investigation operate in a high turnover/low margin business,” the watchdog said.

“[But] a calculation based on relevant turnover reflects the size of the affected market. This means that it is capable of also reflecting the impact of the infringement on competitors, third parties and consumers more effectively than an undertaking-specific measure such as profitability.”

Hardest-hit firm Kier has led the charge in appealing its £18m fine, calling it “excessive” and claiming it did not take into account the group’s relatively low profit margin. Galliford Try and Renew Holdings have also this week pledged to appeal.