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Regulator to educate construction sector

Fuseworks Media
Fuseworks Media

Wellington, Oct 19 NZPA - An investigation of the non-residential construction sector for the Commerce Commission has highlighted a practice called "cover pricing", which involves builders talking to each other to come up with a believable but not genuine bid for a job.

Commission general manager of enforcement Kate Morrison said cover pricing happened in a variety of ways, and there were various reasons for the practice but the common feature was that the cover price was not intended to win the tender, but was meant to look like a legitimate bid.

In general, the research indicated some construction businesses were not aware of competition law and that may be affecting competition for non-residential building projects, the commission said.

"Our research indicates a low level of understanding of competition issues by those in the construction sector," Ms Morrison said.

Information received during the research was provided on the basis of complete confidentiality, and the commission would not be launching an investigation as a result of the research.

It would use the information to begin a targeted education campaign to help builders and those seeking tenders for construction jobs to understand the competition laws.

If specific complaints alleging anti-competitive conduct in the construction sector were laid with the commission, and investigation revealed illegal behaviour, the commission would take appropriate enforcement action, Ms Morrison said.

As part of the education campaign the commission was drawing attention to its leniency policy, which encouraged participants in anti-competitive arrangements to be the first to report the conduct, and gain immunity from prosecution in return for full cooperation.

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