OFFICE OF FAIR
TRADING News Release (52/08) issued by The Government News Network
on 17 April 2008
Following one of
the largest ever Competition Act investigations, the OFT has today
issued a Statement of Objections (SO) against 112 firms in the
construction sector in England.
The OFT formally alleges that the construction companies named in
the SO have engaged in bid rigging activities, and in particular
cover pricing. Cover pricing describes a situation where one or
more bidders collude with a competitor during a tender process to
obtain a price or prices which are intended to be too high to win
the contract. The tendering authority, for example a local council
or other customer, is not made aware of the contacts between
bidders, leaving it with a false impression of the level of
competition and this may result in it paying inflated prices.
Cover pricing arrangements have previously been found by the OFT
and the Competition Appeal Tribunal to be illegal and in breach of
the Competition Act 1998 due to the restrictions on competition
that arise.
In addition, the SO formally alleges that a minority of the
construction companies have variously entered into one or more
arrangements whereby it was agreed that the successful tenderer
would pay an agreed sum of money to the unsuccessful tenderer
(known as a 'compensation payment'). These more serious
forms of bid rigging are usually facilitated by false invoices.
The construction companies under investigation carry out general
building work including construction of housing, as well as
commercial and industrial construction both in the public and
private sector. The SO allegations cover a diverse range of
projects, including tenders for schools, universities and hospitals.
The OFT's investigation originated from a specific complaint
in the East Midlands in 2004, but it quickly became clear from the
evidence that the practice of cover pricing was widespread. The
SO's formal allegations therefore cover neighbouring areas
including Yorkshire and Humberside and also elsewhere in England.
The OFT has also received evidence of cover pricing implicating
many more companies on thousands of tender processes, but has
focused its investigation on approximately 240 alleged
infringements which are being pursued in the SO.
During the course of the investigation, the OFT carried out site
visits at the premises of 57 firms. The OFT received 37 leniency
applications in the investigation leading to this SO, and all
other parties received an offer of a reduced financial penalty
(see OFT press notices 49/07 and 50/07), which led to over 40
further companies subsequently admitting participation in some bid
rigging activities.
No assumption should be made at this stage that there has been an
infringement of competition law by any of the companies named in
the SO. The 112 parties concerned now have the opportunity to make
written and oral representations which the OFT will take into
account before making a final decision as to whether competition
law has been infringed, and as to the appropriate amount of any
penalties the OFT may decide to impose on each of the firms concerned.
John Fingleton, OFT Chief Executive, said:
'Cartel
activity of the type alleged today harms the economy by distorting
competition and keeping prices artificially high. This
investigation, together with the OFT's previous decisions in
the roofing sector, will hopefully send out a strong message to
the construction industry about the seriousness with which we view
suspected anti-competitive behaviour. Businesses have no excuses
for not knowing and abiding by the law.'
NOTES
1. Under the Competition Act 1998 and Article 81 of the
EC Treaty, cartels are prohibited. Any business found to be a
member of a cartel could be fined up to 10 per cent of its
worldwide turnover. In calculating financial penalties, the OFT
takes into account a number of factors including seriousness of
the infringement(s), turnover in the relevant market and any
mitigating and/or aggravating factors. The basis of the OFT's
considerations are set out in OFT's guidance as to the
appropriate amount of a penalty http://www.oft.gov.uk/shared_oft/business_leaflets/ca98_guidelines/oft423.pdf.
2. An SO gives notice of a proposed infringement decision under
the Competition Act 1998 to the parties involved. The parties then
have the opportunity to make written and oral representations in
response to the case set out by the OFT. Such representations will
be considered by the OFT before any final decision is made.
3. The SO will not be published. In accordance with the
OFT's guidance on Involving third parties in Competition Act
investigations http://www.oft.gov.uk/shared_oft/business_leaflets/ca98_guidelines/oft451.pdf,
any person who wishes to comment on the OFT's provisional
findings, and who is in a position to materially assist the OFT in
testing its factual, legal or economic arguments, may request a
non-confidential version of the statement of objections by
contacting the OFT no later than 30 April 2008.
4. The OFT has previously found infringements of the Competition
Act in relation to cover pricing and other bid rigging
infringements in the roofing sector in five decisions between 2004
and 2006 (see OFT press notices 46/04, 48/05, 126/05 and 34/06).
Appeals of the first and last of these decisions to the
Competition Appeal Tribunal confirmed the illegality of cover
pricing (see OFT press notices 36/05 and 32/07).
5. The OFT has also today published an information note to local
authorities and other procuring entities on the implications for
them of this announcement. See OFT website for details : http://www.oft.gov.uk.
6. Under the OFT's leniency policy an undertaking may be
granted immunity from penalties or a significant reduction in
penalty in return for reporting certain categories of Competition
Act infringement and assisting the OFT with its investigation.
7. Anyone who has information about cartels is asked to call the
cartels hotline on 0800 085 1664 or e-mail
cartelshotline@oft.gsi.gov.uk. The OFT has a policy under which
it will pay financial incentives of up to £100,000 in return for
information which helps it to identify and take action against
illegal cartels. Rewards will be paid only where information is
accurate, verifiable and proves to be useful in the OFT's
anti-cartel enforcement work, and will be calculated according to
a set formula and not subject to negotiation.
8. The SO has been issued to the following undertakings:
1. A. H. Willis & Sons Limited
2. ARG (Mansfield)
Limited
3. Ackroyd & Abbott Limited together with its
subsidiary Ackroyd & Abbott Construction Limited
4. Adam
Eastwood & Sons Limited together with its controlling party
the Sir John Eastwood Foundation
5. Admiral Construction
Limited together with (for alleged infringements from 31 October
2003) its ultimate parent company A C Holdings Limited
6.
Adonis Construction Limited
7. Allenbuild Limited and Bullock
Construction Limited together with their ultimate parent company
Renew Holdings plc
8. Apollo Property Services Group Limited
formerly known as Apollo London Limited together with its former
ultimate parent company Apollo Holdco Limited formerly known as
Apollo Group Holdings Limited
9. Arthur M. Griffiths &
Sons Limited
10. B & A Construction (Leicester)
Limited
11. Baggaley & Jenkins Limited
12. Balfour
Beatty Construction Limited, Balfour Beatty Refurbishment Limited,
and Balfour Beatty Group Limited (for alleged infringements from
2000 onwards) and Mansell Construction Services Limited (for
alleged infringements from 19 December 2003), together with their
current ultimate parent company Balfour Beatty plc. For alleged
infringements involving Mansell prior to 19 December 2003, Mansell
and its former ultimate parent company Mansell plc
13.Ballast
Nedam N.V. as the ultimate parent company of its dissolved
subsidiary Ballast plc
14.Beaufort Construction (S-in-A)
Limited together with its ultimate parent company Beaufort
Holdings U.K. Limited
15.Bodill & Sons (Contractors)
Limited
16.Bowmer & Kirkland Limited together with its
subsidiaries B & K Building Services Limited and B & K
Property Services Limited
17.Bramall Construction Limited and
Frank Haslam Milan & Company Limited together with their
current ultimate parent company Keepmoat Limited, formerly known
as Keepmoat plc
18.C. J. Ellmore & Company
Limited
19.Caddick Construction Limited together with its
ultimate parent company Caddick Group plc
20.Carillion JM
Limited
21.Chase Norton Construction Limited together with its
ultimate parent company Chase Midland plc
22.Clegg
Construction Limited together with its ultimate parent company
Clegg Group Limited formerly known as D E Clegg Holdings
Limited
23.Connaught Partnerships Limited together with its
ultimate parent company Connaught plc
24.Crown Point
Maintenance Group Limited as the ultimate parent company of its
dissolved subsidiary Greenwood Building Contractors (Mansfield)
Limited, for Greenwood's alleged infringements after 11 June
2002
25.Davlyn Construction Limited
26.Derwent Valley
Construction Limited together with its ultimate parent company
Chevin Holdings Limited
27.Dukeries Building Company Limited
together with its ultimate parent company Gavco 159
Limited
28.Durkan Pudelek Limited together with its ultimate
parent company Durkan Holdings Limited
29.E. G. Carter &
Company Limited
30.E. Manton Limited
31.E. Taylor &
Sons (Southwell) Limited, trading as Carmalor
Construction
32.F. Parkinson Limited together with its
ultimate parent company Mowbray Holdings Limited
33.Francis
Construction Limited together with its ultimate parent company
Barrett Estates Services Limited
34.Frank Galliers Limited
together with its former ultimate parent company Frank Galliers
Holdings Limited
35.Frudd Construction Limited
36.GAJ
Construction Limited together with its current ultimate parent
company GAJ (Holdings) Limited
37.G Carter Construction
Limited
38.G. F. Tomlinson Building Limited together with its
ultimate parent company G. F. Tomlinson Group Limited
39.G G
Middleton and Sons Limited
40.G. & J. Seddon Limited
together with its ultimate parent company Seddon Group
Limited
41.GMI Construction Group plc together with (for
alleged infringements after 6 February 2005) its current ultimate
parent company GMI Construction Holdings plc
42.Geo Houlton
& Sons Limited together with its ultimate parent company Geo
Houlton & Sons (Holdings) Limited
43.George Law Limited
together with its ultimate parent company Bosworth & Wakeford
Limited
44.Greswolde Construction Limited together with its
ultimate parent company Mantisson Limited
45.Hall Construction
Group Limited
46.Harlow & Milner Limited
47.Harold
Adkin & Sons (Sutton-In-Ashfield) Limited
48.Harper Group
Construction Limited and J. Harper & Sons (Leominster) Limited
together with their ultimate parent company Harper Group
plc
49.Haymills (Contractors) Limited together with (for
alleged infringements prior to 26 May 2004) its former ultimate
parent company Corringway Conclusions plc and (for alleged
infringements after 26 May 2004) its current ultimate parent
company Haymills Group Limited
50.Henry Boot Construction (UK)
Limited together with its ultimate parent company Henry Boot
plc
51.Herbert Baggaley Construction Limited together with its
ultimate parent company Baggaley Group Limited
52.Hill Bros.
(Nottingham) Limited
53.Hobson & Porter
Limited
54.Holroyd Construction Limited together with (for
alleged infringements prior to 30 March 2005) its former ultimate
parent company Holderness Investments Limited and (for alleged
infringements after 30 March 2005) its current ultimate parent
company Holroyd Construction Group Limited
55.Interclass
Public Limited Company together with its ultimate parent company
Interclass Holdings Limited
56.Interserve Project Services
Limited together with its ultimate parent company Interserve
plc
57.Irwins Limited and Jack Lunn (Construction) Limited
together with their ultimate parent company Jack Lunn (Holdings)
Limited
58.J. Guest Limited
59.J H Hallam (Contracts)
Limited together with its ultimate parent company J H Hallam (R
& J) Limited
60.J. J. & A. R. Jackson
Limited
61.J. J. McGinley Limited, together with its former
ultimate parent company McGinley Holdings Limited
62.John
Cawley Limited
63.John Sisk & Son Limited together with
its ultimate parent company Sicon Limited
64.K. J. Bryan
(Builders) Limited
65.Kier Regional Limited together with its
ultimate parent company Kier Group plc
66.Lemmeleg Limited
together with its ultimate parent company Rok plc
67.Lindum
Construction Co. Limited and Lindum Homes Limited together with
their ultimate parent company Lindum Group Limited
68.Linford
Group Limited together with its ultimate parent company F. &
E. V. Linford Limited
69.Loach Construction & Development
Limited
70.Lotus Construction Limited
71.Milward
Construction (Belper) Limited
72.Morgan Ashurt plc formerly
known as Bluestone Plc together with its ultimate parent company
Morgan Sindall plc
73.North Midland Construction plc
74.P
D H Developments Limited (formerly trading as G. Hurst & Sons
(Contractors) Limited) together with its ultimate parent company
G. Hurst & Sons Limited
75.P. Casey & Co. Limited
together with its current ultimate parent company The Casey Group
Limited
76.P. Waller Limited
77.Pearce Construction
(Midlands) Limited together with its former ultimate parent
company Crest Nicholson plc
78.Peter Baines
Limited
79.Phoenix Contracts (Leicester) Limited
80.Piper
Construction Midlands Limited together with its ultimate parent
company Piper Securities Holdings Limited
81.Propencity Group
Limited together with its wholly owned subsidiary companies, ISG
Jackson Limited, ISG Regions Limited formerly known as ISG Totty
Limited, ISG Totty Building Limited and Propencity
Limited
82.Quarmby Construction Company Limited together with
its ultimate parent company St James Securities Holdings
Limited
83.Quarmby Construction (Special Projects) Limited
together with its ultimate parent company Justgrade
Limited
84.R Durtnell & Sons Limited together with its
ultimate parent company R Durtnell & Sons (Holdings)
Limited
85.R. G. Carter Limited, R. G. Carter Building Limited
and R. G. Carter Construction Limited together with their current
ultimate parent company R. G. Carter Holdings
Limited
86.Richardson Projects Limited
87.Robert Bruce
Construction Limited
88.Robert Woodhead Limited together with
its ultimate parent company Robert Woodhead Holdings
Limited
89.Robinson & Sawdon Limited
90.Shaylor
Construction Limited
91.Simons Construction Limited and
Wrights Construction (Lincoln) Limited together with their
ultimate parent company Simons Group Limited
92.Sol
Construction Limited together with its ultimate parent company
Barkbury Limited
93.Speller-Metcalfe Limited
94.Spicers
(Builders) Limited
95.Stainforth Construction
Limited
96.Strata Construction Limited (formerly trading as
Weaver)
97.T. & C. Williams (Builders) Limited
98.T.
Denman & Sons (Melton Mowbray) Limited
99.Thomas Fish
& Sons Limited together with its ultimate parent company Fish
Holdings Limited
100.Thomas Long & Sons Limited together
with its ultimate parent company Radford Holdings
Limited
101.Thomas Vale Construction Plc together with its
ultimate parent company Thomas Vale Holdings
Limited
102.Thorndyke Limited
103.Try Accord Limited and
Galliford Try Construction Limited together with their ultimate
parent company Galliford Try plc
104.W. R. Bloodworth &
Sons Limited
105.Wiggett Bros & Co
Limited
106.Wildgoose Construction Limited
107.William
Sapcote and Sons Limited together with its ultimate parent company
Sapcote Holdings Limited
108.William Woodsend
Limited
109.Willmott Dixon Construction Limited together with
its ultimate parent company Willmott Dixon Limited
110.Wright
(Hull) Limited together with its ultimate parent company T. Wright
& Son (Holdings) Limited
111.Wygar Construction Co Limited
together with its ultimate parent company Wygar (Holdings)
Limited
112.York House Construction Limited
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