Monday, 24 November 2014

Builder sees cover pricing fine slashed

Affordable housing developer Galliford Try has had a fine for cover pricing slashed from £8.3 million to £1.4 million.

The Office of Fair Trading issued the original fine in September 2009 for three breaches of the Competition Act 1998, but the house builder took the case to the Competition Appeal Tribunal and has today seen the penalty reduced.

The OFT fined 103 construction firms a total of £129.5 million for anti-competitive activity, which mainly involved working together to drive up the prices paid by clients. Several of the firms have appealed against the scale of the fines.

Last week the tribunal cut the fine to social housing contractor and developer Kier from £17.9  million to £1.7 million, saying the penalty was ‘excessive’.

In a statement Galliford Try said it ‘does not condone any form of anti-competitive activity and continues to maintain a rigorous competition law compliance regime across all its businesses’.

Readers' comments (8)

  • Tom - Please help us cut through the jargon in these articles in future.

    It'd be really helpful to have a one-line description of 'cover pricing' for those of us not involved in the detail of contract management. I had to go to google (and the Sky News website, for goodness sake!) to find out what it was. The related Kier story was no use either....

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  • Rick Campbell

    If Keir got a 90% discount then Galligord Try should have got the same?

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  • What is £1.4m to Galliford FA as they will be saying! This has gone for years in my Estimating days 30 years ago we used to do it as if you didn't you never got another chance to tender!! So a cover price it was.

    But the world has changed and after being a client for over 20 years and with over 32 years in social housing in all. I am now working for a small contractor...... work for big contractors is luckily what we don't have to do .... at the moment. We are about to finish a 3 year contract with one of the majors..... 90 to 120 days payment terms and they keep a retention in the region of £100k on us.... they just don't care!! Are any responsible? True partnership working. Big boys sub in the majority of cases and the clients end up paying 15% premium uplift on the smaller companies prices! Clients there laughing at you!!

    Back to the story...... suspend them from tendering, do they really care

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  • Arthur Brown

    I agree with Baz. Cover pricing was traditionally used by builders to avoid being penalised by clients for being too busy to tender. A successful builder could be struck off future tender lists if he was too busy to tender for just one job. It was RSLs & local authorities who encouraged this practice (perhaps unwittingly) through their tendering procedures.

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  • And this is where the first comment comes in. We're not talking about cover pricing in the context of just submitting a cover to stay in favour, it was organised cover pricing between a number of contractors - taking it in turns to be the high bidder so that the others could all put in higher bids without it looking suspicious. Personally, I just don't put the culprits on my tender lists, although you could argue that they will probably not try it again whilst everyone else is still up to it.

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  • Chris

    What people are forgetting is that we, as tenants / taxpayers / housing sector workers, have all paid extensively for this fraud (lets call it by its real name) to the tune of many £Millions. Celebrating the reduced fine to these private companies in that context seems foolish, except that otherwise workers jobs could have been lost in greater numbers on the grounds that the shareholders could not be expected to pay the price for illegality.

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  • Mr Reasonable

    Nothing but organised fraud.

    I would significantly increase the fines or make the Contractors carry out free essential infra structure work for either the Government or the Councils who they defrauded out of millions.

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  • Chris Webb

    An interesting moment of agreement with Mr Reasonable.

    In a society that pillories the poor for overclaiming a £5 it seems an unacceptable inequality to not pursue corporations for multi £Million fraud. In the same way it was unaccepatable to not pursue Lady Porter for the Millions she was fined, and it is unacceptable to not amend legislation to prevent other Tories and their friends avoiding paying collectively £Billions in tax.

    For all the 'they'll leave the country' arguments what is missed is that it is down to the everyday suckers to pay more tax to make up for these rich and elite giveaways and concessions. For instance we each paid £5 to fund the benefits paid to Mr Green last year where as we each only paid less than a tenth of 1 penny to pay benefits to an average unemployed family - who's the scrounger?

    The criminal corporations should not have their fines reduced, and as Mr Reasonable says, should be made to do service to make good the resources that they stole from Society.

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