BALFOUR Beatty Plc and Carillion Plc, the UK's two largest construction companies, are among 112 builders accused of rigging bids in the country's biggest-ever cartel investigation into the industry.

The Office of Fair Trading alleges the companies engaged in so-called cover pricing and other anti-competitive activities, it said yesterday in a statement.

Connaught Plc, Interserve Plc, Morgan Sindall Plc, Kier Group Plc, Rok Plc, Galliford Try, Ballast Nedam NV and Henry Boot Plc are also named. The probe, started in 2004, focused on England's east Midlands, Yorkshire and Humberside regions and involved 57 office dawn raids.

It uncovered evidence of cover pricing, where bids are submitted in a tender that are not designed to win but intended to give the appearance of competition. Companies can be fined as much as 10 percent of their annual revenue if found guilty.

"The next stage is going to be the key stage in terms of what level of fines will be levied and that's going to be where the uncertainty will be," Andy Brown, an analyst at Panmure Gordon & Co in London, told Bloomberg News. "The fines will higher than what we've seen in the past, but not totally onerous."

Carillion declined 1.2 percent to 364 pence (US$7.18) in London trading yesterday as of 8:40am local time. Morgan Sindall, Galliford and Henry Boot also slipped.

Evidence found

The investigation into more than 3 billion pounds worth of tenders found evidence of bid rigging in thousands of orders. A minority of the builders are also accused of paying "bungs" or bribing rivals to submit overpriced bids, the OFT said. The OFT will focus on 240 local council tenders spanning school, university and hospital-building projects.

Thirty-seven companies applied for leniency in exchange for assisting with the probe before the offer was withdrawn in March last year. The investigation only looked at activities in the two years to December 2006.

Balfour Beatty has cooperated fully with the investigation and as a result has been granted leniency to reduce any possible fines, the builder said in response to the OFT's statement. The London-based company will respond to the accusations "in due course." Ballast Nedam said it is not liable for the alleged infringement at a now-dissolved unit and no provision has been made.

The probe looked at companies carrying out general building work, housing and commercial work, including repair and maintenance. It did not cover highway construction and civil engineering such as bridges and railways. The companies will now review the OFT statement.