Heavy fines for construction companies

Monday, June 24, 2013

Pretoria - The Competition Commission has reached a settlement with 15 construction firms, who have agreed to pay fines to the tune of R1.46 billion for collusive tendering.

“The Commission has reached settlement with 15 construction firms for collusive tendering, in contravention of section 4(1) (b) of the Competition Act. The firms have agreed to penalties collectively totalling R1.46 billion,” said the commission in a statement on Monday.

The settlements were reached in terms of the Construction Fast Track Settlement Process, launched in February 2011. The fast-track process incentivised firms to make full and truthful disclosure of bid rigging in return for penalties lower than what the Commission would seek if it prosecuted these cases.

According to the Commission, 21 firms responded to the offer of a fast-track settlement.

While over 300 instances of bid rigging were revealed through this initiative, the settlements were reached only with respect to projects that were concluded after September 2006, before which transgressions are beyond the prosecutorial reach of the Competition Act.

Firm settlement amount:

1.  Aveng R306 576 143

2.  Basil Read R94 936 248

3.  Esorfranki R155 850

4.  G Liviero R2 011 078

5.  Giuricich R3 552 568

6.  Haw & Inglis R45 314 041

7.  Hochtief R1 315 719

8.  Murray & Roberts R309 046 455

9.  Norvo R714 897

10. Raubex R58 826 626

11. Rumdel R17 127 465

12. Stefanutti R306 892 664

13. Tubular R2 634 667

14. Vlaming R3 421 662

15. WBHO R311 288 311

“The responses to the Construction Fast Track Settlement offer revealed various ways in which firms historically determined, maintained and monitored collusive agreements. These included meetings to divide markets and agree on margins,” noted the commission.

Different combinations of firms coordinated tenders over different projects. Firms colluded to create the illusion of competition by submitting sham tenders (“cover pricing”) to enable a fellow conspirator to win a tender.

Three firms did not accept the Commission’s settlement offer in terms of the fast track process. These are: Group 5, Construction ID and Power Construction.

“Construction firms that have not used the opportunity to disclose or settle contraventions will be investigated and prosecuted. With the evidence gathered during this process, the Commission will investigate and prosecute firms that have not disclosed any projects but are implicated by others or those that have elected to settle only some of the projects that they are implicated in,” said the Commission.

The Commission is a statutory body constituted in terms of the Competition Act, No 89 of 1998 by government empowered to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy. - SAnews.gov.za

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