Office of Fair Trading says firms fined for cover pricing should not be penalised by clients

The Office of Fair Trading and Office of Government Commerce have urged clients not to blacklist contractors found guilty of cover pricing.

The advice is contained within a joint notice sent out to procurers this morning as 103 firms were slapped with total fines of £129.5m for anti-competitive practices.

Queens Medical Centre Nottingham
Cover pricing first emerged at Queens Medical Centre in Nottingham

The OFT said evidence suggested cover pricing was a “widespread and endemic practice” in the construction industry and many more firms than the 103 investigated were likely to have been involved.

It said: “The endemic nature of the practice within the industry suggests that many other companies are likely to have been involved in bid rigging, even though such activity remained undetected. For this reason, it cannot be assumed that the parties are the only companies that may have engaged in cover pricing.

“In light of the above, it is the recommendation of both the OFT and the OGC, that the parties should not be excluded automatically from future tenders on the grounds that they are parties to the decision, or be the subject of similar adverse measures making it more difficult for them to qualify for such tenders.”

The notice pointed out that the affected companies would be “particularly aware” of the competition rules and “if anything, more likely to be compliant”. Many of the parties had cooperated fully with the investigation and taken measures to introduce formal compliance programmes, it said.

However, the notice added that it was a matter for individual procurers to decide what action to take in response to the OFT’s decision, after taking appropriate legal advice.