The Office of Fair Trading (OFT) has accused 112 construction companies of rigging bids for contracts. It said the firms colluded among themselves while bidding for contracts, leading to customers, such as local authorities, having to pay too much.

The regulator added that in a few cases firms entered into agreements whereby the successful tenderer would pay a sum of money to those that lost out. It said the cartel practice involved the use of false invoices. The OFT said that of the 112 firms accused, 40 had already admitted price fixing, while a further 37 had applied for leniency.

Construction giants Balfour Beatty and Carillion are among those the OFT accuses of taking part. The regulator said the tactic at the centre of the bid rigging was "cover pricing", whereby one or two bidders would collude with another to deliberately offer the customer a price that was too high to win the contract.

The OFT added that "a minority" of firms made arrangements whereby the winner of the bid would make a payment to those companies that deliberately lost out. The OFT said its investigations first started in 2004 following an initial complaint regarding building contracts at building contracts at Nottingham's Queens Medical Centre. An OFT spokesman said its accusations, issued in a Statement of Objections, will now go to the companies concerned. They will then have a number of months in which to respond.

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