Crest Nicholson wins judicial review on bid rigging

Building giant Crest Nicholson has won its High Court challenge against the Office of Fair Trading (OFT) in a bid-rigging row.

Crest Nicholson said it was unfair that the OFT had refused to re-open an offer to co-operate with it over its investigation into bid rigging in the construction industry. The fast track offer was made by the OFT after its biggest-ever investigation, a probe into collusive tendering in the construction industry, and firms that co-operated will face potentially reduced penalties.

However, the OFT said the ruling, which also found that there was no-need to re-open the offer to Crest Nicholson, was unlikely to delay further the publication of the results of the inquiries, expected in the autumn.

Crest Nicholson was drawn into proceedings because of its historic ownership of Pearce Construction (Midlands), which was a subsidiary of Crest Nicholson until a management buyout in 2003.

Pearce Construction (Midlands) is no longer trading, but the OFT investigated some of its dealings between 2000 and 2002.

At the High Court, lawyers for Crest Nicholson argued that a decision on 8 May, 2008, not to reopen the fast track offer made on 7 November, 2007 was unlawful. Crest Nicholson had declined the offer in December 2007.

Richard Gordon QC, for Crest Nicholson, argued that the OFT had "infringed the principle of equal treatment" because it had not given the company the same opportunity to make an "informed decision" as it had other parties involved in the investigation.

And he said that the OFT had "breached the principle of procedural fairness" because it had not given Crest Nicholson enough time to understand the gist of the case it faced.

In a lengthy ruling, Mr Justice Cranston upheld both those grounds of judicial review challenge.

Crest Nicholson's complaints, he added, centred on the fact that, because it no longer had any links to the Pearce Group - and by extension Pearce Construction (Midlands) - it could not properly investigate 18 allegations which had been made by the OFT.

"Crest Nicholson had no means of establishing whether the allegations had any basis in fact and, therefore, credibility," said the judge, who added that the 18 allegations were later reduced to three.

"What was needed was for the OFT to have acknowledged that Crest Nicholson might be in an objectively different position to other fast track offer recipients," said the judge.

"The upshot is the OFT has acted in breach of the principles of fairness and equal treatment," he added.

A spokesperson for Crest Nicholson said: “We are very pleased to have won the judicial review, but of course this does remain subject to an ongoing investigation.”

A spokesman for the OFT said the judgment confirmed that it was entitled to make the fast track offer, and that the OFT wasn't required to reopen it. He said: “The OFT is considering the judgment and its implications for the case but hopes that the judgment, which relates to a limited aspect of the investigation, will not have any significant adverse effect on the timetable for issuing its Decision in this matter, currently scheduled for the third quarter of this year.”