September 22, 2009

Construction firms nailed for bid-rigging

Britain's Office of Fair Trading has fined 103 construction companies $211 million after a four-year investigation of anti-competitive contract bidding.

Officials said the companies were involved in illegal anti-competitive bid-rigging activities, between 2000 and 2006, including submitting inflated bids for public sector contracts, a practice called cover-pricing.

The high bids are not submitted to win a contract, but to raise the perception among clients that other high prices are reasonable, The Times of London reported Tuesday.

However, the fines were viewed as far less than they might have been.

Bearing in mind the huge resource the OFT has thrown at this four-year case "¦ this is not a massive fine, said Watson Burton attorney Tristan Meears-White, who represented 14 of the construction companies.

With the construction sector already hurting from the recession, I think, politically, it would have been difficult "¦ if this decision had led to 50 or 60 of these companies going under. They are big employers, Meears-White said.

Some of the larger fines were levied on Balfour Beatty, fined $8.4 million, Carillion, fined $8.6 million and Ballast Nedam, fined $13.5 million, the OFT said.