Watchdog finds bids worth £500m rigged
office at evnuk.org.uk
Sat Dec 3 18:31:56 GMT 2005
Watchdog finds bids worth £500m rigged
Friday December 2, 2005
The Office of Fair Trading has uncovered evidence that bids for
construction contracts worth £500m have been rigged and believes the
scale of the anti-competitive practices could be much greater.
The competition body found more than a thousand contracts in just one
region - the east Midlands - had been won this year because of unfair
Philip Collins, the new chairman of the OFT, said: "Based on this
modest sample, you can get an impression of the possible national
scale of the bid-rigging problem".
The OFT received much of the evidence through its leniency scheme,
which allows an amnesty to people and businesses that testify to the
watchdog. Although the OFT has encouraged whistleblowers to step
forward with information on cartels and has just run a "come clean on
cartels month", it believes more can be done.
The OFT has already listed housing and construction as one of its
"priority areas", along with healthcare, mass market scams and credit
In a wide-ranging speech to an audience of competition experts, Mr
Collins also attempted to address some of the criticisms made by the
National Audit Office in a hard-hitting critique of the competition
watchdog a fortnight ago. The NAO report urged the OFT to speed up its
investigations, improve the way they were managed and do more to
prevent staff leaving, and Mr Collins stressed that the competition
body was changing.
In an attempt to speed up investigations, he hinted at a greater use
of section 42 of the Competition Act, which can impose criminal
sanctions on businesses and individuals that fail to meet OFT
deadlines for requests for information. "We have been reluctant to use
these powers in the past, not least on grounds of proportionality. But
their use may now have to be considered in appropriate cases."
The NAO noted that as of April 2005 there were six OFT investigations
that had lasted for more than three years. It also raised issues about
transparency of cases and Mr Collins said that the OFT hoped to
eventually give indications of how long individual cases would take to
investigate. It intends to publish each year how long completed
inquiries have taken to move through each stage of the inquiry
Mr Collins also outlined a subtle change to the way in which the OFT
will initiate cases. The OFT has traditionally relied on complaints
from customers and businesses to spark inquiries. But, he said: "You
can expect to see a change in the balance of the cases we take
forward. Some will continue to be complaint-led. However, we expect a
proportion ... to be intelligence-led, that is own-initiative cases.
"Complaints will be only one of the reasons that we decide, on our own
initiative, to take the case forward. The NAO anticipated that we
should make better use of intelligence and develop own-initiative
cases and that is what we intend to do," he said.
Mr Collins also warned against using the OFT to fight battles that
might be better suited to the courts. "There seems to be a perception
among at least some practitioners that the OFT is a publicly funded
resource that can be effectively used as a tool - some may even a say
a punchball - in business-to-business, competitor-to-competitor
battles in the market," he said.
"Substantial internal and external resources, to which big companies
have ready access, are devoted to pursuing complaints where, in
reality, the complaint is about the pressures or the threats of the
competitive process and there is little or no evidence of consumer
detriment or of complaints from consumers."
Office of Fair Trading to withdraw merger advice service
02 December 2005
Companies will no longer be offered guidance on potential mergers, the
new head of the Office of Fair Trading (OFT) has announced as part of
a major overhaul aimed at making the office more efficient.
Philip Collins, OFT chairman, said the pressures on the OFT to be more
efficient were greater than ever and the guidance would be scrapped as
part of a cost-cutting exercise.
He told competition lawyers it was time to remind parties of the OFT's
powers after being exploited in potential mergers.
"There seems to be a perception that the OFT is a publicly-funded
resource that can be effectively used as a tool - some may even say a
punchball - in business-to-business, competitor-to-competitor battles,
" he said.
He also warned that any companies that fail to provide information to
investigators may face the threat of criminal prosecution in a radical
reform of the 1998 Competition Act.
As part of the revamp, the OFT will focus more on persuading companies
to litigate their own disputes rather than complaining to the OFT. It
will also set up a preliminary investigation unit to identify priority
The OFT expects to receive about 1,200 complaint cases in 2006 but
only has the resources to pursue between 25 to 40 of them.
Author: Georgina Fuller
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