Kier, the building and construction firm, has admitted it is under the watch of the Office of Fair Trading as part of the competition watchdog’s investigation into bidding practices in the construction industry.

The Bedfordshire-based group said it had received a letter from the OFT regarding its conduct in tenders it submitted between 2000 and 2005.

Kier said the OFT's inquiry covered 20 bids, stressing that the bidding activity concerned represented a “very small proportion” of bids made by its Kier Regional business over the five-year period.

News of the OFT’s interest sent Kier shares down 93p, or 4 per cent, to £22.52 in afternoon dealing.

The company said it was co-operating with the OFT in the investigation.

The OFT first started investigating so-called “bid-rigging” in the construction sector in 2004. Since the launch of its investigation it has raided 57 companies and found evidence that thousands of tenders for construction work involved some element of rigging.

Bid-rigging occurs where two or more companies competing for a contract collude to keep the cost of bidding down. The winning firm might, in return, share work from the contract with the losing firm.

The penalties for operating within a cartel can be costly. Companies found guilty can be fined a sum equal to 10 per cent of their global sales.

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