Collusive tendering fine slashed

Posted: 7th August 2012

A construction company fined by the Office of Fair Trading (OFT) for its involvement in anti-competitive tendering has had its penalty reduced by more than £120,000 by the Court of Appeal.

Interclass Plc. was one of a number of companies fined for collusive tendering practices in the construction industry following the OFT’s largest ever investigation under the Competition Act 1998. The investigation resulted in fines totalling £129.2 million being imposed in September 2009.

Construction siteThe investigation uncovered a widespread practice, known as ‘cover pricing’, whereby companies engaged in competitive tendering exercises deliberately put in losing bids in collaboration with other tenderers after forbidden disclosures of commercially sensitive and confidential price information.

Interclass admitted involvement in two incidents of ‘bid rigging’ and, after the penalty was reduced by 25% to take account of the company’s early admissions and co-operation with the OFT, a penalty of £464,406 was imposed. That penalty was later reduced to £324,000 – or £162,000 for each infringement – by the Competition Appeal Tribunal (CAT).

The Court of Appeal has now reduced the penalty further – to a total of £202,000 – after accepting the company’s plea that the fine was out of line with the level of penalties considered appropriate by the CAT as a deterrent in other similar cases.

Although Interclass was refused a further reduction to reflect its ‘financial hardship’ Lord Justice Patten, sitting with Lady Justice Hallett and Sir Andrew Morritt, said that the consequences of the method that the CAT had used to calculate the company’s fine had been ‘both disproportionate and unjust’.