黑洞社区

Small contractors accused of anti-competitive practices are preparing to close their businesses rather than pay fines imposed on them by the Office of Fair Trading.

The plans have emerged as the industry braces itself for the final outcome of the OFT鈥檚 inquiry into 112 contractors accused of cover pricing and, in some cases, bid-rigging. The decision on fines is widely expected next week.

Firms are expecting to be given up to 48 hours鈥� notice of the decision, although no details will be released in advance of the announcement.

The maximum fine they face is 10% of turnover, although precedent suggests something closer to 2% is more likely, and contractors may be given up to two years to pay any fine.

However, a number of firms on the list said they would consider shutting their businesses rather than paying the fine. The managing director of a small contractor on the list said: 鈥淚f the fine is as much as 2% of our turnover, depending on what time period we have to pay it over, we will consider whether it鈥檚 worth paying or better to shut down.

鈥淲e鈥檒l have to look at how much of a struggle it鈥檚 going to be because we鈥檒l be talking about a couple of million and it may not be worth doing.鈥�

Contractors fear the impact of fines may be compounded by public clients shunning those found guilty. The head of one firm said more than 90% of his firm鈥檚 work was from the public sector, and feared clients would turn their backs on the company: 鈥淚 don鈥檛 know where we would go from there; it would probably close us down,鈥� he said.

It is understood that the OFT will issue guidelines for public sector clients at the same time as it delivers its verdicts on the 112 firms. This will advise procurers against striking the contractors found guilty off their suppliers鈥� lists.

However, it is not clear how effective this will be, as a report this month by the Organisation for Economic Co-operation and Development found that 76% of procurers would not use a firm found guilty by the OFT.

Last week 黑洞社区 revealed that up to a dozen firms have already had their charges dropped, and at least six others are set to have fines reduced.

鈥� And there鈥檚 more to come

Further fears have been raised that clients may attempt to sue contractors for losses they believe to have resulted from cover pricing. Rudi Klein, chief executive of the Specialist Engineering Contractors鈥� Group, said: 鈥淚f local authorities can prove they could have got a contract at a cheaper price, they鈥檒l want to recover their losses.鈥� He added that larger firms could be targeted as they are seen as more likely to pay up.

He said: 鈥淭here鈥檚 a fear in the industry that councils might try and reclaim costs lost as a result of cover pricing.鈥�

It is understood that US legal firms have approached clients offering advice on how to reclaim money from contractors found guilty by the OFT. A spokesperson for Local Partnerships, which advises UK local authorities on procurement, said: 鈥淐ouncils always need to be alert to the risk of contractors trying to carve up deals.鈥�