The Office of Fair Trading (OFT) has today issued a Statement of Objections against 112 construction firms in England, accusing them of price-fixing.

Many of the companies on the OFT list work regularly on leisure projects, raising the question whether councils and private operators up and down the country have been short changed when putting schemes out to tender.

The OFT formally accuses the companies on the list to have engaged in bid rigging activities, and in particular cover pricing. Cover pricing describes a situation where one or more bidders collude with a competitor during a tender process to obtain a price that is intended to be too high to win the contract.

The tendering authority, for example a local council or other customer, is not made aware of the contacts between bidders, leaving it with a false impression of the level of competition and this may result in it paying inflated prices.

In addition, the Statement of Objections formally alleges that a minority of the construction companies have variously entered into one or more arrangements whereby it was agreed that the successful tenderer would pay ‘compensation’ to the unsuccessful tenderer.

According to the OFT, the companies under investigation carry out general building work, including commercial and industrial construction both in the public and private sector. The watchdog declined to name any particular schemes it had found to be suspect, but said it has focused its investigation on around 240 alleged infringements.

In a statement, OFT also emphasised that “no assumption should be made at this stage that there has been an infringement of competition law by any of the companies named in the Statement of Objections”.

The 112 parties concerned now have the opportunity to make written and oral representations which the OFT will take into account before making a final decision as to whether competition law has been infringed, and as to the appropriate amount of any penalties the OFT may decide to impose on each of the firms concerned.

John Fingleton, OFT chief xecutive, said: “Cartel activity of the type alleged today harms the economy by distorting competition and keeping prices artificially high.

“This investigation, together with the OFT's previous decisions in the roofing sector, will hopefully send out a strong message to the construction industry about the seriousness with which we view suspected anti-competitive behaviour.”

Companies on the list which have recently worked on leisure-related projects include Balfour Beatty, Caddick Construction, Carillion JM and Kier Group. The full list of the 112 companies can be found at http://www.oft.gov.uk/