Contractors found guilty of cover pricing ordered to pay severe fines totalling £130m

The Office of Trading had slapped 103 firms with average fines of £1.26m, or 1.14% of their annual global turnover.

The contractors have been found guilty of anti-competitive practices including bid-rigging and cover-pricing in a five-year OFT investigation.

The OFT said most firms it investigated were involved in cover pricing. However, it found six instances of more serious anti-competitive behaviour, where successful bidders had paid an agreed sum of money to the unsuccessful bidder, known as a 'compensation payment'. The payments were of between £2,500 and £60,000 and were covered up by false invoices.

Eighty-six out of the 103 firms received reductions in their penalties because they admitted their involvement in cover pricing during the investigation.

Of the accused firms, the OFT gave 33 discounts between 35 and 65% in return for them helping with the investigation. A further 41 got 25% reductions in return for admitting cover pricing.

A further 12 companies got smaller reductions for admitting to minor infringements. In total fines have been reduced from £194.4m (a reduction of £64.9m).

Stephen Ratcliffe, chief executive of the UK Contractors’ Group, said: “These fines could not have come at a worse time for the industry as the economic situation continues to deteriorate.” He urged clients against “discriminating” against the firms fined.

Building reported last week that several firms on the list 112 could be forced to close if the fines were severe.

Cover pricing is when a firm tenders for a contract with a high price in order to avoid winning the job. The aim is to remain on the client’s future tender list while avoiding taking on work it does not have capacity for in the immediate term.

The OFT began its investigation of anti-competitive behaviour in construction in 2004. It had evidence against over 1000 firms in connection to 400 contracts totalling £3bn but pursued only 112 of them.