UK faces ‘significant risk’ from price trade, CMA warns

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newspaper.

The UK government faces a “significant risk of fraud” by contractors, the head of the competition regulator has warned.

Sarah Cardell, head of the Competition and Markets Authority, said the agency was trialling a new technology-backed tool it believed could help catch companies linked to public contracts.

The pilot program, which uses AI to scrape large data, is part of efforts to reduce fraud and waste in the UK’s £300bn-a-scrape public procurement market.

“We know that the property market is very vulnerable to manipulation,” Cardell told the Financial Times. “We now have the ability to analyze data in large quantities, to provide data at a large scale, to see differences in that purchasing data, and to identify areas that may be anti-competitive. .”

A pilot program with one government department “has proven to be very successful”, he said.

Last month the CMA announced a new investigation into cheating regarding questionable activity in relation to the Department of Education’s school improvement fund.

The agency says it has reason to suspect that several companies providing roofing and construction services have conspired to cheat to get contracts with a fund that is used to protect educational buildings.

In 2023, CMA fined 10 construction firms nearly £60mn for rigging bids to win contracts for demolition and asbestos removal.

Public procurement has come under intense scrutiny in the UK in recent years after several contracts awarded in the wake of the Covid-19 pandemic raised questions about a lack of transparency and conflicts of interest between suppliers and contractors. a politician. The cost of goods accounts for a third of public spending, which was £329bn in 2021-22.

A new diversion system start working quickly this year it will mean that companies will be banned from buying public contracts if they are found to have violated the competition law.

“We think that (the program) has the potential to save billions in savings for the public purse, but it is also clear that it boosts the productivity of the public sector, which is the main part that goes back to the growth plan of the (institution) ,” Cardell said.

The agency was given a special mandate to prioritize growth by the previous government, but has faced criticism from Sir Keir Starmer’s administration over delivering the metric.

The prime minister told a meeting of world business leaders in October that he wanted to “make sure that every regulator in this country, especially our economic and competition authorities, takes growth seriously like this room”.

Cardell also defended the CMA’s record, saying its policy guidance over the past two years “made it clear that supporting productive and sustainable growth across the UK economy was a priority in CMA”.

The guard is and intends to review its use of “moral remedies” by combining the judgments of 2025. Instead of forcing companies to abandon businesses, such remedies use other measures – such as price suppression – to protect consumers.