Cover pricing

The BBC news website is reporting on the practice of 'cover pricing', which has been used in the construction industry for years and is now experiencing a crackdown. The OFT has fined 103 firms over £129.5 million for what are widely agreed to be unfair price distortions.
Surprisingly there are those within the industry that feel cover pricing is fair game, as it's been commonly used for years.

My understanding of cover pricing, for anyone that's as unfamiliar with it as I was this morning, is that the term is used for businesses that tender for work at distorted prices. They are able to do this by persuading competitors to submit dummy bids at a similar cost and then pay them a cut once the work has come through.

Surely this is just an issue of honesty. Whether usual or unusual, sharp, deceptive or simply underhand practices like this should at the very least be frowned upon, if not punished by financial penalties and I'm glad to see that this is what's starting to happen.

Trust is at the very heart of many business relationships and without this firms will really suffer. More's the pity that it's often the few that serve to undermine an industry's reputation. It's not far removed from the expenses scandal in some ways, where a group of individuals or businesses become unfairly tarred by the actions of others. Common as it may seem, there will always be those who unjustly end up carrying the can for years to come.