Competition watchdog targets construction firms

The Competition Commission on Tuesday proposed a “fast-track settlement” for companies in the construction sector that have been party to collusive practices in bidding for projects in the public and private sectors.

The commission is investigating 65 bid-rigging cases in the construction sector, involving more than 70 projects worth about R29-billion.

“Construction firms are invited to apply for fast-track settlement with complete and truthful disclosure of information regarding collusion,” the Competition Commission said.

“In addition, the firm must undertake to cooperate and cease anti-competitive conduct. Upon complying with the requirements, the commission will settle with participating firms with a reduced administrative penalty compared with the penalty if each transgression were to be prosecuted separately,” it said.

The commission’s investigation in the construction industry has uncovered widespread anti-competitive conduct through various arrangements.
Major companies in the sector, for example, have held meetings to allocate tenders and police each other’s behaviour through a structure referred to as “The Party”.

Financially advantageous
The commission aims to encourage companies to enter into a comprehensive settlement, which would be financially advantageous. “It aims to minimise the associated legal costs and speedily resolve cases. Further, the process will strengthen evidence against those firms not taking advantage of this initiative.”

Markets for construction products such as long steel, mining roof bolts, concrete pipes, plastic pipes, wire-mesh, reinforcing steelbar installation and pilings construction have also been investigated. Subsidiaries of several major construction companies are involved in these cartels, the commission has pointed out.

A case against the primary producers of reinforcing steel bar (the steel mills) was previously referred to the Competition Tribunal. The commission said it would refer cases in rebar and pilings.

“In addition, 150 marker applications [indicating an intention to apply for corporate leniency], some relating to more than one project, have been received by the commission. Most of these corporate leniency applications were submitted by Group Five, which has been cooperating with the commission since 2009.

“In addition, applications were received from Grinaker-LTA and Murray & Roberts, which have committed to cooperate with the commission,” the commission said.

The fast-track settlement process will work concurrently with the commission’s corporate leniency policy. A company that applies for settlement may also apply for leniency.—I-Net Bridge