Sunday, September 27, 2009

Bid-rigging: Innocent firms set to pursue OFT

Innocent contractors Adonis ConstructionChase Norton Construction, including parent Chase MidlandEG CarterFrank GalliersGeorge Law and parent company Bosworth & WakefordJ GuestPiper Construction (Midlands) and parent company Piper Securities Robert Bruce ConstructionSpicers (Building)

Contractors cleared of any wrong-doing in the OFT bid-rigging investigation are considering compensation claims for the cost of proving their innocence.

And small and medium-sized firms hit with fines are planning to appeal following fears that the swingeing penalties could send them under.

Nine firms originally named by the OFT (see box) were officially cleared last week as the competition watchdog imposed fines totalling ВЈ129.5m on 103 construction firms found guilty of bid-rigging and cover pricing.


Innocent firms set to pursue OFT


One source at a cleared contractor said: "We are asking our lawyers to look at the chance of recovering legal costs spent defending this action.

"We felt the whole process was a bit of a kangaroo court and we were presumed guilty throughout the whole process.

"There was absolutely nothing in it as far as we are concerned and it has cost us a sizeable amount in fees and legal costs as well as the damage to our reputation. We are very unhappy about the whole process."

Contractors found guilty by the OFT have two months to decide on an appeal.

Richard Diment , director general of the Federation of Master Builders, said: "It is a bit early to pick up exactly what contractors are doing, but they are probably going for more specialist advice and our members are working with legal experts."

One industry expert said: "I am not sure if some of the smaller local companies will survive. They could go bust in the current climate because of the size of the fines they have been hit with.

"That will also have a knock-on affect for payments to subcontractors and suppliers."

Eighty-six out of the 103 firms have received reductions in their penalties because they came clean about their involvement.

But contractors cleared in the investigation have been critical of how the probe was handled.

One innocent builder said: "I think some of the evidence was really slight. Some of it was just about an innocent conversation one of our estimators had three years ago.

"We invited the OFT in to inspect our tender files because we could find nothing.

"One company we knew came clean and turned over everything in return for leniency. They had been keeping records of companies they were speaking to but often that consisted of little more than tender lists, which are freely available.

"Just because you are on a tender list doesn't mean you are colluding - but because one firm admitted to that they assumed everyone on those lists was guilty. We were simply listed as a tendering contractor but were then presumed guilty from that, which is totally unfair."

Industry leaders are also monitoring the behaviour of clients to make sure firms caught up in the OFT probe are not discriminated against.

Stephen Ratcliffe, director of UKCG, said: "We will be closely monitoring the reaction of public sector clients. The OFT has made it crystal clear that clients should not exclude contractors and we will make sure this does not happen."

Bid-rigging: OFT urges clients not to exclude guilty contractorsLaw firms court clients with flat fees