Following an investigation by the Competition and Markets Authority (CMA), 10 UK-based construction firms have been fined £59,334,957 for colluding on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts. These bids were rigged, deceiving the customer that they were competitive when that was not the case.
The bids were rigged by one or more of the construction firms agreeing to submit bids that were deliberately priced to lose the tender. This practice, known as ‘cover bidding’, can result in customers paying higher prices or receiving lower quality services.
In addition, the CMA found that 5 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 this compensation varied but was higher than £500,000 in one instance. Some firms produced false invoices to hide this part of the illegal behaviour.
The public and private sector contracts impacted included the development of Bow Street Magistrates Court and Police station, the Metropolitan Police training centre in Hendon, Selfridges (London), properties belonging to Oxford and Coventry Universities, shopping centres in Reading and Taplow, a large office block on London’s Southbank and other sites in central London.
The CMA have a useful guide for public sector procurers to help you spot and deal with bid-rigging. Well worth a read.
In2 the bargain 