The construction industry was reeling last night after the competition watchdog accused more than 100 companies of price-fixing and local authorities demanded refunds for overcharging in rigged bids. Financial Times The Times

Local authorities have been colluding with builders in the “bid rigging” of construction projects to make it appear as if proper competition has taken place, it was claimed yesterday.

Widespread price fixing by building companies has cost the taxpayer up to £4bn, according to one of the largest investigations by the Office of Fair Trading, the competition watchdog. But yesterday one of the companies named in the OFT investigation into cartel activity in the construction industry claimed that the bogus bidding was being organised by public and private-sector purchasers.

It alleged that buyers had been asking builders to submit hopeless tenders to fool taxpayers and shareholders into believing that proper competition had taken place.

The OFT urged anyone with information about dishonest buyers to contact its cartels hotline and said that any such purchasers could be jailed.