Ten roofing contractors have been found guilty of fixing the prices of, and sharing markets for, flat roofing contracts in the north-east and Scotland by collusive tendering between 2000 and 2002.
A recent Scottish investigation shows the OFT's willingness to break up even
local-level cartels to ensure that customers get the best deal, thereby dispelling
the myth that only the largest companies are affected by competition law.
The OFT found that the collusion was intended to restrict or distort competition
and led to uncompetitive prices for buyers when buying flat roofing services.
The companies involved were originally fined nearly £830,000 but this
was reduced to £560,000 due to the OFT's policy of leniency to whistleblowers
and reduced fines for co-operating with investigators. One cartel participant
escaped liability entirely due to the leniency programme.
The OFT has identified the construction sector as one of five priority areas
for scrutiny in 2005 following high numbers of complaints to the OFT of anti-competitive
practices by cartels within the sector, particularly in respect of price-fixing
and bid-rigging during tenders.
The recent case demonstrates that the OFT's investigations are not limited
to the largest construction firms. This is not the first case of this kind.
In early 2004 the OFT levied total fines of more than £300,000 against
nine separate roofing contractors in the West Midlands, which it found had
colluded in relation to the making of tender bids in flat roofing contracts.
This decision was recently upheld by the Competition Appeal Tribunal.
Fines are not the only possible consequence of an infringement of the Act.
Firms may face civil damages from customers who claim to have suffered a loss
as a result of the anti-competitive behaviour, and in certain circumstances
individuals may also be punished. Company Directors can be disqualified for
up to 15 years if found to have taken part and individuals can face prison
sentences of up to five years and an unlimited fine. In certain circumstances
the OFT can offer leniency to undertakings that come forward with information
about a cartel that they are involved in. Immunity from fines (and in some
cases from individual sanctions) may be total or partial depending on when
the firm comes forward and whether or not it instigated the arrangements.
Directors can minimise the risk of an infringement of the Act (and potential
personal liability) by ensuring that their firm undertakes a competition law
compliance review. It is important to remember that what were once acceptable
business practices may now be illegal. Such a review should aim to provide
training to front line employees and managers, to identify sensitive areas
of a firm's business and may include a compliance audit to uncover potential