Punishment ‘could make firms bust’

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"These fines could not have come at a worse time for the industry and are unfair," said Stephen Ratcliffe of the UK Contractors Group.

"The industry is going through its sharpest downturn on record with huge falls in demand, employment and profits and on current trends is expected to contract 20% by the end of 2011. These punitive fines will be hard to absorb and cost jobs."

Andrij Jurkiw, a partner at City lawyer DLA Piper, said: "Many of the companies involved will be considering whether they can stay afloat. If many business are tipped over the edge as a result of these fines, this will lead to reduced competition, an outcome the OFT will surely not be looking for.

"To the OFT this case undoubtedly represents a great victory. Whether it will lead to real benefits for the consumer is highly questionable."

The National Federation of Builders admitted "cover-pricing" was widespread but that the practice has been "dying out".