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How does the OFT work out penalties?

The Office of Fair Trading has outlined the way that it is going to build up the fines that it imposes on firms found guilty following its investigation into the construction industry.

1 – The OFT decides how serious the bid-rigging offence is to create a starting figure. The more serious the infringement, the higher this starting point can be.

2 – This starting point can be any value between zero and 10 per cent of the firm’s relevant turnover. Relevant turnover is the turnover for that kind of work, in the geographical market the offence occurred.

3 – The starting point figure can then be increase (or in isolated cases, decreased) based on the duration of the offence under investigation.

4 – The OFT can then revise this figure up or down based on other factors such as the financial benefit the firm may have enjoyed through its actions, a firms size and its financial circumstances.

5 – The OFT will then look at any aggravating factors (such as the involvement of senior employees, repeated infringements by the same firm and encouraging other firms to take part in bid-rigging) and revise up the figure base on this. It can also reduce the total for factors such as genuine ignorance that behaviour was illegal, actions taken to prevent reoffending and co-operation to speed up the enforcement process.

6 – The fine figure at this stage must not exceed 10 per cent of the firms total worldwide turnover in the most recent financial year.

7 – Reductions of up to 100 per cent in the fine can then be achieved if the firm was the whistleblower that initially triggered the OFT investigation. The first firm to come forward for leniency following that start of the investigation may also receive 100 per cent fine reduction. Later leniency applications can receive reductions of between zero and 50 per cent.