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Construction firm fined nearly R22m for tender cover pricing

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Stellenbosch University. (Photo: Stellenbosch University)
Stellenbosch University. (Photo: Stellenbosch University)

Cape Town – A construction company on Tuesday was penalised R21.7m by the Competition Tribunal for engaging in tender cover pricing in two construction projects in Stellenbosch.

Cover pricing, which is pervasive in the SA construction industry, is an unlawful practice that can deceive a customer about the source and extent of the competition that exists for the work in question.

It occurs when companies want to be seen to “tender for a particular project but either does not wish to win the tender, or does not have the time or resources to prepare a carefully priced tender for that project”, according to Norton Rose Fulbright. “The company accordingly submits a high bid that it does not expect will be successful.”

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