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September 23, 2009

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Construction firms fined for bid rigging

BRITAIN'S competition watchdog has imposed fines totaling 129.5 million pounds (US$211 million) on 103 construction companies it said had colluded in bidding for contracts.

Eighty-six of the companies were given lower penalties because they admitted their involvement in bid rigging, the Office of Fair Trading said yesterday. The agency said it discovered the practice, also known as cover pricing, in bidding for 199 projects between 2000 and 2006.

In these cases, some contractors submitted inflated bids that were intended to let a competitor gain the contract.

In 11 cases, the office said, the low bidder faced no competition at all because all the other bids had been inflated.

The agency said it also discovered six instances in which the successful bidder had paid kickbacks of between 2,500 pounds and 60,000 pounds to unsuccessful bidders.

The violations were found in both public and private construction projects.

Andy Brown, an analyst at Panmure Gordon & Co, said the total fine "is not as bad as expected," and said the OFT action should have no major impact on the construction sector. "It may have a short-term negative sentiment hit," he said in a research note.

The Kier Group, based in Sandy, England, was fined the largest sum, 17.9 million pounds. Interserve Project Services Ltd, a susidiary of Interserve plc, was fined 11.6 million pounds.

Mansell, a subsidiary of Balfour Beatty plc, was fined 5.2 million pounds, representing a 50 percent reduction because of its cooperation with the investigation. Balfour Beatty said the violations occurred before its acquisition of Mansell in 2003.


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