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Bid-rigging is ‘endemic’ in UK construction, says OFT

The Office of Fair Trading has told an international roundtable of Government and business leaders that the UK construction industry has an “endemic nature” of bid rigging and may be ”prone to collusion”.

In a new report published by the Organisation for Economic Co-operation and Development, the Government watchdog said the British construction industry itself has admitted the practice was endemic and “it appears that only significant enforcement action of the type currently being undertaken by the OFT is likely to eradicate it.”

The comments were made after the OFT’s investigation into cover pricing allegations against 112 construction companies.

The report – which looks at issues in the construction sectors of 19 countries, including the UK, US, France, Japan, and Russia – was published this month after a roundtable discussion of competition policymakers from around the world.

The OFT said it had also undertaken research to evaluate its own effectiveness in relation to the alleged cartel activity.

It found that cover pricing was seen as the main form of bid rigging and 18 per cent of respondents actually believed it to be legal. The OFT did not say exactly how many companies
were involved in the survey.

Lawyers this week criticised the OFT over the research. Pinsent Masons competition partner Alan Davis said: “[The research] has not been publicised before nor have companies under investigation been given the opportunity to review the OFT’s findings so far.

“If the OFT wanted to rely on the research in any way to substantiate its decision against the companies under investigation or to assess the level of penalties, it would have to give the companies involved a chance to review and comment on the research work as part of those
companies’ rights of defence.”

A final decision on the bid rigging case is due from the OFT by April.