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Nabarro secures six-fold reduction in OFT bid rigging construction fine

18 March 2011

Nabarro has successfully appealed against an Office of Fair Trading (OFT) fine imposed on its client Corringway Conclusions plc, securing an 85% reduction in a highly significant judgement by the Competition Appeal Tribunal.

The Tribunal concluded that the penalty imposed on Corringway as part of the OFT's 'bid rigging decision' was excessive given the nature of the offence and slashed the fine from £769,592 to £119,344.

The Competition Appeal Tribunal published its judgment in the Corringway Conclusions PLC (in liquidation) v Office of Fair Trading appeal, on 11 March 2011.

This is one of 25 appeals against the OFT's "Bid rigging in the construction industry" decision. The OFT had fined Haymills Contractors Limited ("HCL") for three infringements of competition law where HCL provided cover prices in tenders for construction contracts. The OFT concluded that this was a form of bid rigging. HCL was a wholly owned subsidiary of Corringway at the time of two of the infringements. Prior to the publication of the OFT's decision, HCL was placed into insolvent administration. In the decision, the OFT found Corringway to be jointly and severally liable for a fine of £769,592, relating to the two infringements.

Corringway appealed the level of the fine to the Competition Appeal Tribunal. In its judgment, the Tribunal allowed Corringway's appeal, and rejected the OFT's method of calculating the fine, including the OFT's imposition of a "minimum deterrence threshold" on all the parties. The Tribunal found that the fines were excessive given the nature of the offence. In addition, the OFT had failed to take into account the individual characteristics of Corringway and the fact that there is no need to deter a company that has ceased trading.

The judgments in these appeals are highly significant in determining the way in which the OFT may impose fines against companies in accordance with its fining guidelines.

The Nabarro team consisted of Cyrus Mehta (Partner) and Ilan Sherr (Senior Associate) from the EU, Competition and Trade team, and Glen Flannery (Partner) from the Insolvency team, instructing Paul Harris (QC) of Monckton Chambers.

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