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OFT closes door on cartel leniency in construction bid rigging cases in England

50/07    22 March 2007

The OFT is today making an offer of a reduced penalty to all those companies implicated in its current bid rigging cartel investigation in the construction sector in England, that have not so far applied for leniency. See press release 49/07.

In conjunction with this initiative, construction companies in England are now informed that, in view of the extent and the quality of the evidence obtained by the OFT so far, no further applications for leniency in this investigation are being considered.

The OFT emphasises that applications for leniency are still possible for any matters outside the scope of its current investigation, be they bid rigging activities outside England or in construction-related industries such as civil engineering or highway maintenance. Leniency may also still be available in relation to particularly serious forms of bid rigging that may be subject to criminal enquiry or in relation to activities other than bid rigging.

The investigation has uncovered evidence of bid rigging activities which include cover pricing, where companies obtain a price from a competitor in the tender process which is not designed to win the contract but is intended to give the appearance of competition. The Competition Appeal Tribunal has fully endorsed the OFT's decision in its investigations and confirmed that cover pricing is anti-competitive and contravenes the Chapter I prohibition. In some instances the OFT has also found evidence in the current investigation of compensation payments or 'bungs' being passed between competitors in exchange for a cover price.

The investigation has focused in particular on the East Midlands, Yorkshire and Humberside areas, and those regions surrounding these areas, although the OFT has also found some bid rigging activities in other parts of England. The investigation focuses only on activities up to 31 December 2006 and has not looked at any other potential anti-competitive practices within the construction industry. The term 'construction companies' used in this case refers to those companies that engage in general building work including construction of housing together with commercial and industrial construction, both in the public and the private sector. It includes new build work as well as repair, maintenance and improvement. Construction in this case does not include highway maintenance, civil engineering or other large infrastructure projects.

During the course of the two year investigation, the OFT has for the first time used digital evidence gathering or forensic IT in order to discover electronic documents held on computers, as well as forensic analysis of documents where attempts may have been made to hide evidence. The OFT has also carried out interviews with ex-employees of implicated parties.

If any potential leniency applicant is in any doubt as to whether leniency may be available or whether their conduct is within the scope of the current investigation, they should contact the OFT's Cartels Hotline on (020) 7211 8888.

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