OFT fines roofing contractors for price-fixing

United Kingdom

The OFT has fined nine roofing contractors over £330,000 in total for having agreed to fix the prices of repair, maintenance and improvement (RMI) services for flat roofing in the West Midlands.

The OFT opened a formal investigation in June 2002 (see the box below for more details of the OFT's powers of investigation) after it received information which gave it reasonable grounds to suspect that certain roofing contractors had been engaged in collusive tendering.

On investigation, the OFT found that the contractors had reached agreement to set their tender prices so that when certain purchasers in the West Midlands area (a number of schools, a community library, a shopping centre and a car park) tendered for bids they were unable to obtain competitive prices.

The OFT is responsible for enforcing the Competition Act 1998. Chapter I of the Competition Act prohibits agreements which prevent, restrict or distort competition. The OFT concluded that the contractors were involved in a number of individual agreements or practices designed to fix tender prices and therefore to restrict or distort competition for the supply of RMI for flat roofs in the West Midlands.

Agreements which fix prices are among the most serious infringements of the Competition Act and financial penalties were imposed on the contractors.

The OFT also operates a whistleblowing regime aimed at encouraging businesses involved in illegal arrangements to come forward with information. In line with this policy, one contractor was granted 100 per cent leniency and another 50 per cent.

OFT powers of investigation

The OFT may investigate where it has reasonable grounds to suspect a competition law infringement using the following formal powers to:

  • require, by written notice, the production of specified documents and information
  • enter business premises without a warrant and inspect them (including the power to require the production of documents, require an explanation of documents produced and their relevance to the investigation, require the production of electronic data in readable and portable form, and to take any other steps necessary to preserve documents and prevent interference (for example sealing premises)
  • enter any (business or domestic) premises with a warrant and in addition to the powers above to use such force to gain entry as necessary, seize original documents, take and remove copies in order to determine relevance or where it is not practicable to separate the document/information from a document which is not within the scope of the investigation.
  • Companies who are investigated have certain legal protections including the right to legal advice during an investigation, the right to refuse production of legally privileged documents and to refuse to answer incriminating questions, and the OFT must observe statutory limitations on disclosure of confidential information.

For further information please contact Salim Gunny at salim.gunny@cms-cmck.com