Tony Bingham’s article, “The cost of a phone call” (9 October, page 30), is based on a misunderstanding of the Office of Fair Trading’s position.
The OFT has never claimed that unilaterally submitting a high price is illegal. Rather, as Mr Bingham says, the illegality arises where the price is obtained from a competing bidder. However, Mr Bingham is mistaken to imply that such contact is harmless or that it will only be illegal where the OFT can prove that the collusion actually resulted in a higher price for the customer.
In all cases, collusive cover pricing distorts tender processes designed to secure best value, with the potential to result in higher prices. Moreover, such collusion offers no compensatory benefits to the customer.
Most businesses understand that contact between bidders to discuss bids is illegal, even where that falls short of outright determination of who wins or what the winning price will be.
The fact that such practices had become commonplace in the construction sector only serves to underline the need for the OFT’s action and to send a strong signal that collusive cover pricing is illegal and must stop. At a time when many in the industry, including bodies such as the UK Contractors Group and the National Federation of Builders, have taken welcome steps to encourage future compliance, the muddying of the waters by the article is unfortunate.
Stephen Blake, director – cartels, Office of Fair Trading