Aveng fined R46m for collusion

Listed construction and engineering group Aveng has been fined R46,3-million—in terms of a consent agreement—for collusion, the Competition Commission said on Friday.

This followed an investigation by the commission into anti-competitive practices in relation to concrete products, which form part of a range of products manufactured by Infraset, a business unit within Aveng.

The findings of the investigation together with the consent agreement were subject to confirmation by the Competition Tribunal, the commission said.

In the consent agreement, Aveng admitted that Infraset colluded with its competitors in contravention of the Competition Act and the fine of R46,3-million amounted to 8% of Infraset’s turnover.

According to the commission, Aveng also agreed to develop and implement a formal compliance programme.

“Infraset is involved in the manufacture of precast concrete pipes and culverts which are used in building and construction.

“Aveng has admitted that Infraset was party to price-fixing, market allocation and collusive tendering in the markets for concrete pipes and culverts in Gauteng, KwaZulu-Natal and the Western Cape,” the commission said.

During December 2007, the commission received an application for leniency under its corporate leniency programme from Rocla regarding its involvement in a cartel in the precast concrete market within South Africa.

The commission initiated an investigation and found that Rocla, together with Southern Pipeline Contractors, Concrete Units, Infraset, Grallio, Cobro, Cape Concrete, Concrite Walls, Craig Concrete and D&D had engaged in fixing the selling price of pipes, culverts and manholes, dividing the markets for the production and distribution of pipes, culverts and manholes; and collusive tendering in respect of the supply of precast concrete sleepers to certain projects.

“The respondents had regular meetings around the country in which they discussed and agreed to divide contracts among each other, divide geographic markets between the parties, allocate products to one another and implement mechanisms to monitor any deviations from the agreed upon terms,” the commission’s statement said.

The arrangements of the respondents mainly applied in Gauteng, KwaZulu-Natal and Western Cape.
According to the commission, pipes, manholes and culverts were sold mainly to building contractors who were contracted to the government or private enterprises to construct and erect pipelines and sewerage systems, or sold directly to government departments and municipalities.

“Apart from the consent agreement that the commission has concluded with Aveng, and the conditional leniency awarded to Rocla, the commission is seeking the maximum allowable penalty of 10% of annual turnover in the preceding financial year for the remaining respondents in this cartel,” it said.

Aveng informed its shareholders of the fine.

“The group has suspended two executives implicated in the investigation pending an internal probe into any misconduct associated with the findings of the commission,” the company said.

Further disciplinary action might be taken depending on the outcome of the process, it added.

Aveng said that in addition, another executive had been placed on special leave.

“Aveng had already launched several initiatives prior to the Competition Commission investigation, including an educational programme in conjunction with a law firm to train senior executives in competition matters and the roll-out of an anti-corruption framework,” the company’s statement said.

In addition, Aveng would develop and implement a formal compliance programme as prescribed by the Competition Commission in terms of the consent agreement, the company said.

“Aveng’s board of directors is committed to good corporate practices, has a zero-tolerance policy towards unethical behaviour and will continue to act swiftly to deal with any breaches of its code of business conduct and the Competition Act.”—Sapa

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