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Aggrieved Construction Companies Must Pay £16.5 Million Fines

Six construction companies which were between them fined more than £16.5 million by the Office of Fair Trading (OFT) for their involvement in anti-competitive ‘bid rigging’ have had their hopes of getting part of their money back dashed by the High Court.

The six and many other companies involved in the construction industry were hit with swingeing penalties in 2009 following a five-and-a-half-year OFT investigation. None of the six had exercised their rights of appeal to a specialist tribunal; however, others had done so and had had their fines substantially reduced.

The OFT had nevertheless refused to cut the penalties payable by the six and, having been left with a sense of grievance, they launched restitution proceedings. In those circumstances, an issue arose as to whether those claims could lawfully be pursued when the time limit for appealing to the tribunal was long expired.

In dismissing the companies’ cases, the Court found that, on a correct interpretation of the Competition Act 1998, an appeal to the tribunal was the only method of challenging either the imposition or the amount of a penalty imposed by the OFT and that the common law remedy sought by the six was thus excluded.

In circumstances where appeals to the tribunal were permitted on a ‘full merits’ basis, the Court found it ‘highly improbable’ that Parliament had intended to leave open the possibility of alternative remedies. Claims in restitution could in any event not be established in that it could not be argued that the penalties imposed by the OFT had been ‘unlawfully exacted’.

On reaching its decision and imposing the fines, the OFT had completed its statutory function and the revocation or variation of those penalties had not been sought by the only permissible route. In those circumstances, the OFT itself did not have power to reduce the penalties and the six could have no legitimate expectation that it would do so.