Tender participants beware: Five fined for office fitting bid-rigging

On 1 March 2019, the UK Competition and Markets Authority ("CMA") announced that it has found that five office fit-out firms had engaged in bid-rigging in breach of competition law. 

The conduct and the fines

The CMA's investigation has found that each of Fourfront, Loop, Coriolis, ThirdWay and Oakley (all of which provide services such as fit-out, design and refurbishment of commercial and non-residential premises) engaged in "cover bidding" in competitive tenders, colluding on the prices they would bid for contracts.

Cover bidding involves companies agreeing with each other to place bids that are deliberately intended to lose the contract, thereby reducing the intensity of competition. It is classed as a form of bid-rigging and can lead to customers paying an artificially inflated prices or receiving poorer quality services.  It was also investigated in the construction sector back in 2004-2009, which led to fines on over 100 construction firms in England.

The five companies agreed to pay fines totalling over £7 million after admitting being involved in cartel behaviour. The companies have agreed to pay the following fines, reflecting a number of factors including their size and financial position, and their role in the conduct:

• Fourfront, £4,143,304
• Loop, £1,090,816
• Coriolis, £7,735
• ThirdWay, £1,780,703
• Oakley, £58,558

The CMA and bid-rigging

For a long time now the CMA has focused on bid-rigging, both in the public and private sector.  In particular, this decision comes in the wake of the following:

• the CMA's investigation into bid-rigging in the solid fuel products sector;
• numerous CMA campaigns aimed at targeting a range of industries that are at greater risk of cartels forming, including construction (of which office fit-out is part of), manufacturing and business support services;
• the CMA's launch of digital tool to fight bid-rigging, aimed at indicating if bid-rigging has taken place; and
• the publication of bid-rigging advice for public sector procurers.

This case demonstrates the CMA's continued focus on bid-rigging, and that both private and public tenders are within the regulator's spotlight.