Competition watchdog fines construction firms

2013-06-24 12:54

Fifteen construction companies have agreed to pay fines that collectively total R1.46 billion for collusive tendering, the Competition Commission has said.

“The Competition 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,” it said today in a statement.

The settlements were reached in terms of the “construction fast-track settlement process” launched in February 2011.

This process encouraged firms to make full and truthful disclosure of bid rigging in return for penalties lower than what the commission would have sought if the cases were prosecuted.

Twenty-one firms responded to the offer, and 300 instances of bid rigging were revealed through the initiative.

The settlements related to projects concluded after 2006. Projects before that were beyond the prosecutorial reach of the act.

The firms fined a total of R1 463 814 392 were:

– Aveng: R306 576 143;

– Basil Read: R94 936 248;

– Esorfranki: R155 850;

– G Liviero: R2 011 078;

– Giuricich: R3 552 568;

– Haw & Inglis: R45 314 041;

– Hochtief: R1 315 719;

– Murray & Roberts: R309 046 455;

– Norvo: R714 897;

– Raubex: R58 826 626;

– Rumdel: R17 127 465;

– Stefanutti: R306 892 664;

– Tubular: R2 634 667;

– Vlaming: R3 421 662;

– WBHO: R311 288 311.

The commission said they colluded to create the illusion of competition by submitting “sham tenders” or “cover pricing”, to allow an alleged conspirator to win a tender.

“In other instances, firms agreed that whoever won a tender would pay the losing bidders a ‘losing fee’ to cover the costs of bidding. Sub-contracting was also used to compensate losing bidders,” the commission said.

The three firms which did not accept the settlement offer were: 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,” the commission said.

Competition Commissioner Shan Ramburuth said he was pleased with the level of participation in the fast-track process.

“Embedding a competitive culture will be critical to bringing down the costs of future infrastructure investments and will incentivise firms towards innovation and efficiency in future projects.”

» This story was updated after first published

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