OFT alleges building industry cartel

Last Modified: 17 Apr 2008
By: Carl Dinnen

More than 100 construction firms, including some of Britain's biggest names, could face massive fines after being accused of rigging the price of building contracts.

The Office of Fair trading investigated a wide range of contracts across the country, worth billions of pounds - from primary schools to a city hospital.

Among the firms it investigated were construction giants Balfour Beatty and Carillion.

The OFT thinks it has identified two scams.

One is cover pricing, when a company that does not actually want the work puts in an artificially high bid so the company that does want the work can come in just below that with a price that is now low enough to get the job but is still higher than it would normally have been.

In other cases companies would bill one another for compensation and the client would end up footing the bill.

The OFT is investigating claims that a primary school spent £500,000 over its budget price, four companies forced a college to raise it's budget by 25 per cent and two bidders working together caused a hospice to spend an extra £10,000.