UK construction groups accused of rigging bids in £150m contracts

The competition watchdog said it has provisionally found 10 firms that illegally colluded on tenders in London and the Midlands

A total of 10 construction companies in the UK have been accused of rigging bids relating to 19 contracts, including Lots Road Power Station, worth more than £150 million.

The Competition and Markets Authority’s (CMA) investigation, launched in 2019, provisionally concluded the firms colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts for demolition and asbestos removal projects.

It found the bids were rigged by one or more construction companies that agreed to submit bids “that were deliberately priced to lose the tender”, the practice of which is called ‘cover bidding’.

This can result in customers paying higher prices or receiving lower quality services, according to the CMA.

The competition watchdog is proposing to impose fines if it reaches a final decision confirming the companies have broken the law.

The CMA has also provisionally found seven of the firms, on at least one occasion each, were involved in arrangements by which the designated ‘losers’ of the contracts were set to be compensated by the winner.

The value of the compensation varied but was higher than £500,000 in one instance, with some firms producing false invoices to hide this part of the illegal behaviour.

Eight of the firms – Brown and Mason, Cantillon, Clifford Devlin, DSM, J F Hunt, Keltbray, McGee and Scudder – have admitted to being involved in at least one instance of bid rigging between January 2013 and June 2018.

The collusion affected demolition work in London and the Midlands, including contracts for the development of Bow Street’s Magistrates Court and Police station, the Metropolitan Police training centre, Selfridges and Oxford University.

Michael Grenfell, the CMA’s Executive Director for Enforcement said: “The construction sector is hugely important to Britain’s economic well-being. Bid rigging can result in worse deals, which can leave businesses – and sometimes taxpayers – out of pocket.

“This is unacceptable and the CMA won’t hesitate to come down hard on these activities and impose appropriate fines.”

The CMA added its findings are provisional and it should not be assumed any company has broken the law at this stage.

It will determine any fines to be paid at the end of the investigation.

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