Kier fine cut from £17.9m to £1.7m
The Competition Appeals Tribunal has dramatically reduced the fines imposed by the Office of Fair Trading on six firms accused of bid-rigging.
Kier, subject to the largest fine of £17.9m, has had its fine reduced to just £1.7m (see its share price below).
The CAT also dramatically reduced the amount levied on Ballast Nedam, Bowmer & Kirkland, Haymills, Thomas Vale and John Sisk.
The decisions are the first six of 25 appeals against the the £129.2m in fines imposed by the Office of Fair Trading after an investigation into cover-pricing.
In total the six firms had their fines reduced from £41,783,982 to £4,404,969, a reduction of £37,379,013, or -89.5%.
In an embarrassing rebuffal for the OFT, which spent five years on its invetigation, the tribunal concluded that the final penalties imposed by the OFT for “simple” cover pricing were “excessive given the nature of the infringement, together with the harm it was likely to cause, together with certain general mitigation, including the fact that the practice was long-standing in the industry and widely regarded as legitimate.”
The tribunal, led by the honourable Mr Justice Barling, found that the OFT’s decision to take 5% of turnover as the fine fee was too high given the maximum fine for the most heinous infringements of competition law is 10%. It also found that the OFT applied the turnover fine to companies’ turnover on the wrong year.
Real-time Share Price
All six firms were appealing to have the value of the fines reduced, but were not questioning the veracity of the judgement that they had engaged in cover pricing.
In september 2009 the OFT found that, in the period 2000 to 2006, 103 firms had each committed between one and three infringements of competition, the bulk of which were cover pricing, where firms submit falsely inflated bids with no intention of winning the work.
Stephen Ratcliffe, director of the UK Contractors Group, said: “The outcomes of these appeals are matters for the individual companies involved. However, it is now time to move on. The competition law infringements which were investigated arise from an historic practice in the industry. It has been established by the OFT and the Tribunal that giving or taking cover prices is unlawful and could result in severe financial penalties for companies, as well as sanctions for individuals.”