No OFT cover price appeal as construction cleans-up act

Grant Prior 11 years ago
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The Office of Fair Trading has decided not to appeal against massive reductions in cover pricing fines for contractors because the competition watchdog believes construction has cleaned-up its act.

The Competition Appeal Tribunal cut fines totaling £129m levied against 103 contractors in 2009 following the OFT’s long-running probe into cover pricing.

The tribunal decisions saw every contractor that appealed have their fines reduced by up to 94% or written-off completely.

The OFT was mulling an appeal against the cuts but has decided to let the tribunal’s decision go unopposed.

The decision follows a similar one last week which saw the OFT rule out an appeal against cuts for price-fixing penalties against construction recruitment companies from £39.27m to £14m.

OFT chiefs believe the high profile investigations have served their purpose by changing the way contractors operate.

A statement said: “The OFT’s decisions not to appeal have been influenced by the fact that substantial deterrence and change has already been achieved by the two cases.

“An independent evaluation has shown that the OFT’s enforcement action resulted in behavioural change and increasing awareness of competition law in the construction sector, and industry bodies have since launched initiatives to encourage compliance with the law.”

The OFT has been criticised for its heavy-handed assualt on construction and the watchdog is reviewing its tactics.

The statement said: “The OFT recognises that the judgments raise some issues for it to consider about how it carries out its enforcement work, and in particular how it sets penalties.

“It will review its penalty policy, including considering whether changes should be made to its penalties guidance to reinforce its ability to set substantial fines that ensure deterrence, in the light of these judgments and other factors.

“It will also review its internal penalty setting processes and some of its investigative procedures.”

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