| Mon 24 Jun 2013, 12:30 | | THE COMPETITION COMMISSION - Construction firms settle collusive tendering cases with R1.5 billion in penalties |
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THEE 201306240029A
Construction firms settle collusive tendering cases with R1.5 billion in penalties
Competition Commission: Media release
24 June 2013
Construction firms settle collusive tendering cases with R1.5 billion in penalties
The Competition Commission (“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 R1.46bn.
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.
Twenty one firms responded to the Commission’s 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. The
breakdown of penalties per firm is as follows:
Firm Settlement amount (ZAR)
Aveng 306 576 143
Basil Read 94 936 248
Esorfranki 155 850
G Liviero 2 011 078
Giuricich 3 552 568
Haw & Inglis 45 314 041
Hochtief 1 315 719
Murray & Roberts 309 046 455
Norvo 714 897
Raubex 58 826 626
Rumdel 17 127 465
Stefanutti 306 892 664
Tubular 2 634 667
Vlaming 3 421 662
WBHO 311 288 311
Total 1 463 814 392
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. 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. In other instances, firms agreed that whoever won a tender would pay the
losing bidders a “loser’s fee” to cover their costs of bidding. Sub-contracting was also used
to compensate losing bidders.
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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 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.
Competition Commissioner, Shan Ramburuth, was pleased with participation in the fast track
settlement. He emphasised that “in revealing the extent of collusion in the construction
industry, the Commission’s fast track settlement broke up existing cartels and created
awareness of collusive practices in the industry. Embedding a competitive culture will be
critical to bringing down the costs of future infrastructure investments and will incentivise
firms toward innovation and efficiency in future projects”.
For more Information:
Trudi Makhaya, Deputy Commissioner
012 394 3326/ 073 289 3570 / trudim@compcom.co.za
Keitumetse Letebele, HOD: Communication
012 394 3183/ 082 783 3397/ keitumetsel@compcom.co.za
Themba Mathebula, External Communications Coordinator
012 394 3325/ 084 896 0860/ thembama@compcom.co.za
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