Construction companies face hefty fines from Britain’s antitrust watchdog after an initial investigation found they ripped off customers including Oxford University and department store Selfridges by rigging bids for contracts worth more than £150 million ($184 million).
The Competition and Markets Authority said 10 UK construction companies illegally colluded on demolition and asbestos removal contracts, according to a statement on Friday outlining the regulator’s interim findings. Eight of the companies admitted to rigging the bids.
The collusion affected 19 contracts for demolition works in London and the Midlands in England and also included contracts for a Metropolitan Police training college, a courthouse and offices on London’s South Bank. Companies used this practice to trick customers into thinking they were getting competitive prices.
“The construction industry is hugely important to Britain’s economic well-being,” said Michael Grenfell, CMA’s executive director for enforcement. “Bid-rigging can lead to worse deals, which can leave businesses – and sometimes taxpayers – out of pocket.”
The practice used by companies – known as hedge auctions – takes place when one or more construction companies conspire together to offer bids that are deliberately made to lose. This can cause customers to pay more for lower quality services.
Some of the construction companies were tentatively found to have been involved in a deal in which the loser of the contract was compensated by the winner – with one example being over £500,000.
The investigation, which was launched by the watchdog in 2019, shows the CMA’s willingness in recent years to pursue more enforcement cases at a faster pace. The agency cracked down on the cartel activities of Elite Sports, JD Sports Fashion Plc and Rangers Football Club Ltd. at the beginning of the month.
The CMA said it would fine the companies if a final decision confirmed they broke the law and the amount would be decided at the end of the investigation.
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