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Construction: Cartels

Volume 475: debated on Tuesday 13 May 2008

To ask the Secretary of State for Business, Enterprise and Regulatory Reform under what legislation construction industry cartels are prohibited; what prosecutions have been undertaken in cases where legal proceedings have been completed against (a) individuals and (b) companies for acting as a cartel in each of the last five years for which figures are available; and if he will make a statement. (203543)

Cartels are prohibited under the Competition Act 1998 and the Enterprise Act 2002 allows for prosecutions against individuals involved in cases acting in a cartel. There have been no prosecutions of individuals in the last five years, however three individuals have recently been charged and are awaiting a court hearing in respect of a cartel involving marine hoses and ancillary equipment. As the criminal cartel offence applies only to individuals, no company has been prosecuted. However, 13 decisions in civil proceedings have been made against 166 companies in relation to breaches of the Chapter 1 prohibition of the Competition Act 1998 (anti-competitive agreements) since 2003.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what his policy is on offering rewards to members of the public for information about alleged illegal cartels in the construction industry; what legislation governs this; how many calls the cartels hotline has received; and how many (a) prosecutions and (b) convictions resulted from information provided in such calls in each year since the hotline's inception. (203544)

On 29 February 2008, the OFT announced a policy under which it will pay financial rewards of up to £100,000 in return for information which helps it to identify and take action against illegal cartels. Rewards will be paid only where information is accurate, verifiable and proves to be useful in the OFT's anti-cartel enforcement work. Any reward is calculated according to a set formula and not subject to negotiation. This policy will run for an initial period of 18 months, after which a decision will be made whether this should be a permanent arrangement. This is an extra-statutory policy and applies to all industries, including but not limited to the construction industry. The OFT announcement can be found a the following web link:

The OFT has recorded 227 calls on its cartel hotline since 2001. To date none of these calls have resulted in a prosecution or conviction, although the material of some calls is the subject of on going investigations.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform how many construction firms were (a) investigated and (b) prosecuted for (i) bid rigging and (ii) cover pricing in each of the last 10 years for which information is available. (203560)

31 roofing contractors were investigated and fined by the OFT for bid rigging, which also included the practice of cover pricing. A further 112 construction firms are the subject of a current OFT investigation into bid rigging including the practice of cover pricing. No infringement decisions or fines have yet been issued as each firm under investigation has recently been issued with a Statement of Objection which sets out the OFT's formal allegations and evidence. Each firm has been given the opportunity to respond to the Statement.

The OFT received evidence of cover pricing implicating many more companies on thousands of tender processes, but has focused its investigation on approximately 240 alleged infringements which are being pursued in the Statement of Objections. The OFT has used objective selection criteria in order to focus the investigation, based on evidence received up to the point when it closed the door to further leniency applications, including the number of times a company was discovered allegedly to have infringed the Competition Act 1998.