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OFT considers appealing fine reductions

The Office of Fair Trading is considering appealing against today’s ruling to slash the size of fines it handed out to six contractors for cover pricing.

Kier saw its fine reduced from in excess of £17m to just £1.7m as all six appealants’ fines were reduced by the Appeal Commission Tribunal.

But the OFT can question that decision in the Court of Appeal – it needs either the CAT’s permission or the Court of Appeal’s permission. 

The OFT said: “Today’s judgment was limited to the level of penalty for these six companies, who did not challenge our finding that they engaged in illegal cover pricing, in breach of competition law.

“The right to appeal against the OFT’s decisions in Competition Act cases is an integral part of the competition regime and an important safeguard for parties.

“The OFT will consider this judgment in detail, alongside those in the 19 other construction cases yet to be determined, and will consider whether it should appeal to the Court of Appeal.

“Financial penalties play a key role in deterring the companies involved, and other businesses, from breaching competition law. The OFT will consider whether the judgment has any implications for its practices and policies for ensuring a high level of compliance with competition law in the future.”

Readers' comments (5)

  • The OFT should leave the industry alone,there actions have caused untold damage and caused good solid companies real hardship. Lets just get on with building and getting people back to work.Too many jobs are needed in the UK to have any more silly ill considered vendettas. The outcome of the appeals is a result for common sense and British Justice .

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  • Hopefully the reduced fines show that those particular firms, by participating in cover pricing, did not adversly affect any competitive bidding process and cost the clients more money for their projects - unike the ones that were involved in price manipulation, a very serious practice. Maybe the OFT will also then learn that main contractors dont make the massive profits that, say, housebuilders traditionally do. If all contractors were actually price fiddling, don't people think that we all would be actually getting better returns on turnover than aiming for a class leading 4%!

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  • This is no comfort to the many first class building companies that have already gone out of business due to the OFT investigation !
    Has anyone tried to measure the amount of work that has been lost or put on hold since the OFT investigation due to an insufficient number of tenderers? Have clients been able to attract enough tenders?

    By the way, housebuilding returns are negligable at present with the nationals reporting 4% operating profits before interest and overheads, but the funders will only lend if they can see a 25% margin before they will lend at 60% of cost and at interest rates of circa 7% pa. And no-one will lend to those companies that really need the help. So much for relationship banking !!!

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  • The whole process was laughable and ill conceived, they go for an industry that struggles to return any profit at all and presume that this is achieved by major collusion practices !!!!!!

    Why don't they have a quick look into the legal trade who are represented on every high street in the country and should be operating in a very competitive environment, yet still all manage to have a starting hourly rate of circa £180.00 per hour - not a lot of undercutting the competition in this arena.

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  • Following on from the last comment - I will open up the can of worms here - The people who make the most money from business failures are the liquidators and so-called administrators whose charges are astronomical - (this is what the OFT should be concentrating on, the real crooks and their legal cronies who can charge anything they want ) - after they and the banks have been paid there is never anything left for creditors. Creditors never really have a proper say in the winding up of a failed business, once the banks, solicitors and accountants have picked the carcass dry there is nothing left - I sometimes wonder if anyone else is bothered about this but it makes my blood boil.

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