Following the OFT's explosive allegations of bid rigging deputy director of cartels Deborah Jones tells Dan Stewart what will happen next
As deputy director of the OFT’s cartel investigations division, Deborah Jones has been a central figure in the OFT’s inquiry into the construction industry since its inception in 2004. She spoke to us about the process that has led to 112 companies being named as potential law-breakers.
Dan Stewart: You say a ‘minority’ of companies have agreed compensation payments. How many exactly?
Deborah Jones: We’re not going to name names at this stage, but around 10% of the named companies and 5% of infringements that we’re processing relate to illegal payments.
DS: Are you expecting a fierce legal battle, or will contractors put their hands up and come quietly?
DJ: This is a statement of allegations, and contractors have roughly a two month period now in which to react before we start even considering our final position in legal terms. You will also see that we have quite a significant number who have already effectively held their hands up to us. A total of 77 - and the firms that have applied for leniency will get a reduction in their potential fines if they have cleaned up their act.
DS: Can companies still apply for leniency now?
DJ: Applying for leniency only works out at the pre-statement stage. It’s too late for leniency now.
DS: Some people are arguing that the OFT has had plenty of opportunities to warn contractors that these practices are illegal without the rigmarole of a four-year investigation. Are you making an example of the industry?
DJ: I wouldn’t put it like that at all. For a start we’ve had previous investigations into the construction sector, in the roofing sector particularly. We started to investigate these types of practices as long ago as 2002, and we’ve had the feelers out there since 2004. It’s not like it’s taken us until 2008 to have an inkling that colluding with your competitors is illegal.
DS: Do you think you’ve done enough to let the industry know it shouldn’t be doing this?
DJ: When we started investigating back in 2004, publications like your own were aware of the story and it was out there. Legal advisers were in a similar position with clients. The message was already out there that cover-bidding was illegal. This enforcement action is necessary to ensure that the signal continues to be sent, and sent strongly. It’s not the case that we’ve simply sat back and done nothing to tell the industry that this is wrong.
DS: Do any of the allegations deal with practices that are still going on today?
DJ: The allegations in the statement we’ve announced today range from 2000 to 2006. It does take a little while for the legal processes to filter through, so it’s not surprising that there aren’t any from last week. It would take us some time to investigate it further.
DS: But surely in the days of two-stage bidding and best value tendering, cover pricing has all but disappeared?
DJ: No. We do receive indications from time to time that this has been going on fairly recently. We’re hearing statements from various industry representatives today that life has moved on and we would very much hope that that is the case, but we would need to be looking further to be sure that that has happened.
DS: Will you be doing that? And will that affect penalties?
DJ: If it’s the case that we don’t need a deterrent because the industry is already cleaned up, then that would be a factor we would take into account. But we’d certainly want some hard evidence of that, backed up with fact.
DS: So if the industry can prove it, there won’t be a need for fines?
DJ: It’s not quite as simple as that. It’s more than just the firms involved saying we’ve cleaned up our act. But if we genuinely believe that this isn’t a problem in the industry anymore then the need for a deterrent would be weaker. But while I’ve seen people from the industry saying this isn’t a problem any more, we also have people saying this is still rife.