Building cartels blamed for millions lost

By Dan Lalor

LONDON (Reuters) - More than 100 companies building schools and hospitals are suspected of forming cartels to boost contract prices by millions of pounds, the country's consumer watchdog said on Thursday.

The Office of Fair Trading named 112 companies, including Balfour Beatty and Carillion, and said over two-thirds had admitted involvement in bidding for work at artificially high prices.

"The tendering authority ... 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," the OFT said.

The police have not yet been involved in what is, for the time being, a civil investigation, an OFT spokesman said.

The collusion between building companies includes an agreement that the successful tenderer pays an agreed sum to the unsuccessful tenderer. "More serious forms of bid rigging are usually facilitated by false invoices," the OFT said.

A spokesman said the practice was "endemic" and very many more companies were likely to be involved but, at this stage, the OFT was more concerned with stamping out the behaviour than finding every guilty party.

The OFT has looked at over 1,000 contracts varying in size from "several hundred thousand pounds to many millions". It will focus on only some of these contracts to speed its investigation.

Chief Executive John Fingleton said the 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".