News and Press
Construction industry adopts Competition Code of Conduct

On 22 September 2009, following one of its largest investigations into anti-competitive conduct, the Office of Fair Trading (OFT) fined 103 construction companies a total of £129.5 million for bid-rigging. The UK Contractors Group and the National Federation of Builders has responded to the OFT investigation with a new Code of Practice aimed at improving competition law compliance across the industry.

The OFT found that the companies concerned were engaged in "illegal and anti-competitive bid-rigging activities", mainly by means of 'cover pricing'. The illegal arrangements affected building projects worth in excess of £200 million, including schools, universities, hospitals and numerous private projects.

In August 2009 the UK Contractors Group and the National Federation of Builders jointly launched the 'UK Construction Industry Competition Law Code of Conduct' (the Code). The OFT has welcomed the introduction of the Code. The Code sets out the industry's commitment to ensuring the highest standards of competition law compliance and encourages the adoption by contractors of internal procedures to prevent anti-competitive practices. It requires construction companies not to enter into agreements or arrangements with their competitors which are likely to restrict competition in the tendering process, not to exchange commercially sensitive information, but to bid for contracts independently. Although it is not mandatory for companies within the construction industry to follow the Code, compliance with it is a way of reassuring customers that a firm is competing fairly and minimises the risk that the firm will inadvertently fall foul of competition law.

TLT competition associate, Nicola Kingaby, says: "The OFT's decision underlines the importance of ensuring compliance with competition law and, in particular, highlights the consequences of failing to do so. It also signals a more robust approach by the OFT to anti-competitive conduct. Contractors should ensure that they understand the contents of the Code and that their business practices are compliant. The OFT has made clear that future infringements are likely to lead to criminal prosecution".

TLT offers bespoke Competition Compliance Programmes with optional elements, each priced separately. We would be pleased to discuss (at no charge) the options with you and to offer guidance as to how to prevent and to respond to infringements of competition law.

If you would like further information on implementing the Code or on any other competition matter, please contact Nicola Kingaby.