Tribunal confirms R1.46bn settlement with construction companies

Construction Tribunal confirms R1.46bn settlement with construction companies

The Competition Tribunal has confirmed settlement agreements reached with construction companies fined for collusive tendering.

“The firms have agreed to penalties collectively totalling R1.46 billion. In terms of the Competition Act, the tribunal must confirm a settlement agreement concluded between the commission and a respondent in order for the settlement to be legally enforceable,” the tribunal said in a statement today.

The Competition Commission investigates and refers restrictive business practices, abuse of dominance cases and large mergers to the tribunal for adjudication.

Last month, the commission announced that 15 construction companies agreed to pay fines that collectively totalled R1.46bn for collusive tendering. The settlements were reached in terms of the “construction fast-track settlement process” started in February 2011.

This process encouraged firms to make full 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. The settlements related to projects concluded after 2006. Projects before that were beyond the act’s prosecutorial reach.

The Competition Act stipulates that the money received from penalties must go to National Treasury.

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 did not disclose or settle contraventions would be investigated and prosecuted.

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