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Tue October 20 2020

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Construction 'changes behaviour' after bid-rigging fines, says OFT report

7 Jun 10 The construction industry has shown “significant improvements” in its understanding of competition law, and has changed its business behaviour, according to a new report by the Office of Fair Trading.

The construction industry has shown “significant improvements” in its understanding of competition law, and has changed its business behaviour, according to a new report by the Office of Fair Trading examining the impact of last year's bid-rigging investigation.

The OFT fined 103 firms a total of £129.5m in September 2009 after it discovered evidence of illegal bid-rigging, mostly in the form of cover-pricing.

The new report, based on surveys of construction contractors and procurers, was conducted by Europe Economics. Results from a first phase, conducted in 2008, are compared with a second phase, conducted in 2010.

The evaluation highlights a number of positive developments, including:

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  • Nearly three-quarters of contractors are aware of the OFT's decision of September 2009 on bid rigging in the construction industry in England. In 2008, fewer than a third were aware of earlier infringement decisions in the construction sector.
  • Nine in 10 construction firms now recognise that bid rigging, including cover pricing, is a serious breach of competition law with associated penalties.
  • Three-quarters of contractors are aware of fines as a penalty for cover-pricing, compared to less than half in 2008.
  • Approximately two in three procurers have introduced a new mechanism in the last two years to detect or prevent anti-competitive practices.

In addition, the research provides insights into a number of issues, such as the important role of media reports as sources of information about the OFT's work. Trade associations are also perceived as more important sources of information on competition issues than in 2008.

The OFT's approach to competition enforcement involves a relatively small number of high impact cases in order to create a strong deterrent effect across sectors.

The full report is available as a PDF on the OFT website.

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