Charges have been dropped against a number of firms investigated as part of the Office of Fair Trading’s inquiry into tender malpractice in the construction industry, following concerns over the evidence offered by one witness
A source close to the investigation confirmed that charges had been dropped against “up to a dozen” firms. At least six others have had the number of charges against them reduced. It is understood that some of the dropped charges relate to the unreliable witness.
The firms involved are not known, but are not thought to include major contractors.
The news comes as the OFT prepares to make an announcement later this month, on how much it will fine the 112 companies accused of being involved in malpractice, largely relating to cover pricing. Cover pricing is where a firm that doesn’t want a job finds out what rivals are offering, then puts in a higher bid in order to maintain a relationship with a client.
Under UK law the OFT can fine firms up to 10% of their annual global turnover for breaches of the 1998 Competition Act.
Building understands that 38 of the 112 companies will receive a 35-65% reduction in fines
Alan Davis, a partner in Pinsent Masons, said he had been told that 38 of the 112 companies would receive a 35-65% reduction in fines because they applied for leniency and gave additional information to the OFT. About 45 companies also accepted the OFT’s “fast-track offer”, admitting a breach of competition law. Their penalty will be cut by a maximum of 25%.
Davis said it was seen as likely that the OFT would impose penalties of about 1-2% of companies’ turnover, mirroring the fines it imposed on 13 roofing contractors found guilty of price fixing in 2006.
Ten of the companies which faced charges have since gone into administration.