Slap on the wrist for cowboy builders

published 25 September 2009

Britain's Office of Fair Trading has fined 103 building companies a collective £130m for "illegal anti-competitive bid-rigging" on tenders worth £200m between 2000 and 2006.

The collusion involved cover pricing: submitting an excessively high bid to make a supposed competitor's seem more reasonable. Sometimes the chosen firm then made payments to peers who had made inflated bids. Kier received the biggest fine, £17.9m, followed by Interserve's £11.6m.

What the commentators said

Now we know why "public projects so often appear to be eye-poppingly expensive", said James Moore in the Independent: the construction industry's "massive con trick on the taxpayer".

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Construction industry lobbyists "should get bumper bonuses this year", said David Wighton in The Times. The fines could have been much higher. Clearly the OFT has been persuaded that higher penalties could push some firms over the edge, given that the industry is suffering the worst downturn in 20 years.

And that, said Andrew Hill in the FT, would mean even less competition. The offenders are being allowed to pay in installments "a sort of student loan approach to punishment".

Lord Mandelson has also urged the public sector not to exclude the companies involved from future projects, noted Moore. All in all "the worst bit of corporate cowboy building ... this century has resulted in a slap on the wrist ".