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Fresh OFT probes into bid rigging on the horizon

CIOB warns that investigation into fixed bids could be extended to Scotland and Wales

The chief executive of the Chartered Institute of Building has warned there could be a new round of investigation into cartel activity in construction.

Chris Blythe said the Office of Fair Trading’s current investigation - covering 3,000 contracts worth £3 billion - was likely to spread into other parts of the UK.

He admitted the impact will be more damaging for the industry than corporate manslaughter regulations.

Mr Blythe said: “They’ve not touched civils. They’ve not touched Wales or Scotland. There is a lot more corruption out there for them to investigate if they want to.

“This could have a big effect on the industry. It’s certainly a bigger issue than corporate manslaughter. It’s going to be a long cold shower for the construction industry.”

OFT deputy director of the cartels group Deborah Jones revealed that local authorities were the main victims.

Ms Jones said 38 firms have already confessed to bid rigging in an attempt to get their OFT fines reduced.

A number of other contractors have also admitted guilt under new ‘fast track’ rules which will lead to a 25 per cent reduction in future fines.

But the window has now closed for firms to come forward and admit wrong-doing.

The OFT has focused on finding examples of cover bidding, where firms submit a price which is not intended to win the contract, giving the impression of competition in the market.

The investigations have looked at contracts up to December 2006.

Legal firm Berwin Leighton Paisner hosted a seminar on the OFT investigations Đ the UK’s largest ever cartel study Đ for the CIOB in London this week.

David Harrison, the firm’s head of European Union and competition, said: “Fines could be in terms of hundreds of millions of pounds - we’ll be talking very large amounts. The OFT have been saying that the fines have been too low in the past.”

In all, 57 construction companies have received dawn raids from the OFT, with a further 45 also questioned. The individual deals range in value from £30,000 to £25 million.

The OFT has also accessed deleted emails and documents to assist in their investigation.

The investigation is 95 per cent complete. Once the OFT has completed its findings, it will send out a ‘Statement of Objections’ to firms next spring.

Firms will then present their case to the OFT, with prosecutions then expected in 2009.

Companies can challenge the decision with the Competition Appeals Tribunal.

Fines can be up to 10 per cent of turnover. Individuals can also face up to five years’ imprisonment if the OFT presses criminal charges.

The OFT and construction

March 2006 Mowlem head office raided. Morgan Sindall’s Bluestone subsidiary visited as in probe into possible bid rigging

March 2007 57 construction firms raided and 45 more under investigation

May/June 2007 Kier, Rok, Galliford Try, Interserve, Balfour Beatty, Renew and Connaught say they are under investigation

Spring 2008 Statement of Objections to be sent to firms

2009 Prosecutions begin