Local authorities are looking into the possibility of launching legal action against building companies accused last month of cover-pricing and bid-rigging by the Office of Fair Trading (OFT).

Councils have contacted David Greene, the solicitor behind the Northern Rock and Railtrack shareholder action cases, The Times has learnt. They want to know whether they have a case to bring against construction companies that are accused of ripping off the taxpayer.

Mr Greene, a solicitor with the London law firm Edwin Coe, was unwilling to discuss details of any case, but confirmed that several local authorities were examining whether they would be able to bring follow-up legal action, after the OFT publishes its final findings in its construction bid-rigging inquiry early next year.

The OFT last month accused 112 companies of inflating the cost of schools, hospitals and universities by secretly discussing the prices that they would submit to do the work.

According to OFT sources, an endemic culture of cover-pricing - deliberately stating a high price for work that they have no intention of winning so as not to get left off clients' future invitations to tender - increased building costs by 10 per cent on average.

The building companies, which include some of Britain's biggest, have six weeks to respond to the OFT's accusations. The OFT's initial findings, a result of a five-year inquiry involving 250 staff, are expected to be published early in 2009.

However, 37 construction companies have admitted already some participation in cover-pricing as part of a leniency deal with the OFT.

Any legal action is likely to centre on specific contracts. The local authority or client would have to demonstrate that it lost out financially because of illegal activities by the contractor.

However, legal experts agree that the biggest companies named by the OFT are likely to be the main targets of any class-action case.

Nine companies are thought to be facing the most serious accusations of bid-rigging - of divvying up work between them and paying compensation payments to the losing bidders.

These companies have been dubbed the “Calorie Club”, because of regular, secret meetings that they allegedly held where “everyone gets fat”.

The club would meet in restaurants, hotels or bars and consisted of a core group of members, with other firms invited to join on an occasional basis.

Construction firms have been sent warning shots by several big client organisations in the past week. Transport for London is understood to have approached a number of its preferred contractors seeking reassurance that cover-pricing had not taken place on any of its jobs.

John Walker, the chief executive of English Partnerships, said that the regeneration body would be reviewing its recent award decisions and general practices in the light of the report.

Birmingham City Council said that it was questioning firms that worked for it that had been named by the OFT to seek assurances that they had not colluded on the council's contracts.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts