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The OFT has recently issued press releases stating that it has completed its investigations into bid rigging by construction companies in England. It was the OFT's biggest ever investigation involving some 57 companies, including several in the Midlands, and it uncovered evidence that £3billion worth of tenders had been unfairly bid for.

Matters are, however, far from over for companies implicated. Many companies did not realise that they were even subject to any investigation, and there are a number of them which have recently been written to stating that there is unspecified evidence of their involvement in bid rigging. The letter gives the companies involved a short timescale within which to admit this, even though in many situations they have very little information in relation to the claims against them, in return for a reduction in the penalty of up to 25%. The penalties can be very significant, up to 10% of a company's turnover.

According to Andrew James who is a construction and engineering lawyer and partner at leading West Midlands law firm Harrison Clark LLP,

"Whilst everyone in the industry realises that deliberate price fixing is wrong, there are still many people in the industry who do not realise that "giving a cover" (i.e. where a company is asked by a competing tenderer what it will be tendering for a job so that that competing tenderer can put in a bid at a higher price to ensure that it does not win the work (e.g. if it is already too busy) but in doing so does not give the impression that it is not interested in the chance to tender) is unlawful for both parties involved. It is irrelevant that the parties concerned do not gain any financial benefit (for example if neither of them win the tender) and it is also irrelevant whether the ultimate client ends up no worse off as a result.

Similarly, many in the industry mistakenly think that the OFT are just focusing on large contracts, whereas in fact relatively minor works can be subject to a penalty. For example, in one recent reported case, a company called Makers was found guilty of collusive tendering, and was fined £526,500, even though the contract in question was only worth £300,000."

At Harrison Clark LLP we recommend that companies should give staff training and have in place procedures and policies making it clear that the practice of cover pricing is unlawful and could render employees liable to disciplinary action.

Those involved could also face criminal penalties if it is shown that they have acted dishonestly, and any directors implicated are at risk of disqualification action.

Mr James also comments that there is some concern that competitors who have colluded could seek to take advantage of the situation by tipping off the OFT and applying for leniency and then leaving the other party to face a larger penalty following an investigation by the OFT.

For further information on this press article, please contact Andrew James at Harrison Clark LLP on Tel: 01905 744825 or e-mail ajames@harrison-clark.co.uk

Alternatively you can speak to Angela Baker at Marketing IQ Ltd on tel: 01905 359475, mobile 077144 70944 or e-mail: angela.baker@marketing-iq.co.uk


This press release was distributed by ResponseSource Press Release Wire on behalf of Harrison Clark in the following categories: Business & Finance, Manufacturing, Engineering & Energy, Construction & Property, for more information visit http://pressreleasewire.responsesource.com/about.