Wednesday, December 10, 2008

One in 10 bid-rigging firms in administration or liquidation

One in 10 of the contractors named in the OFT's cover pricing investigation has fallen victim to serious financial problems or ceased to trade.

Of the 112 contractors named in April's Statement of Objections (SO), a total of 10 are now in administration or liquidation, after York House Construction called in administrators last month (see list below).

The high proportion of struggling and failed businesses among the group of accused has sparked fears that high levels of fines from the OFT, expected to be announced in the early part of 2009, could send even more companies under.

The OFT has the power to fine a company up to 10% of its relevant turnover if it is found guily of fraudulent bidding practices.


One in 10 bid-rigging firms in administration or liquidation


A spokesman for the Construction Confederation said: "The industry is on a downward trend and there are quite a few companies on the list of the original 112 which are in difficulty or in administration.

"This probably doesn't come into the OFT's criteria when it is thinking of what penalties to impose.

"But we think that it should be a consideration.

"The impact of the level of fines it imposes on the industry is going to be significant."

Adrian Magnus, a competition partner with law firm Berwin Leighton Paisner said: "The challenge is that the OFT will want to have a fine commensurate with the size and importance of the investigation.

"But if it were to impose a fine that put more construction companies into administration or liquidation, then is that really in the wider interest of UK plc?"

The OFT declined to comment on the investigation.

Where are they now?Ballast - dissolved by Dutch parent Ballast NedamChase Norton Construction - administration, July 2008Frudd Construction - liquidation, July 2008G. Carter Construction - liquidation, March 2008Holroyd Construction Group - administration, June 2008Lotus Construction - administration, November 2008Piper Construction Midlands - liquidation, November 2008Thomas Fish & Sons - trading under new ownership following administration, April 2008Thorndyke - liquidationWilliam Sapcote and Sons - administration, October 2007York House Construction - administration, November 2008

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