/ 24 June 2013

Competition Commission orders 15 construction firms to pay up

Competition Commission Orders 15 Construction Firms To Pay Up

The penalties announced on Monday were a percentage of the annual turnover of each company and took into account the number of projects each company was involved in. It was the commission's single biggest collective settlement involving private companies, according to Minister of Economic Development Ebrahim Patel.

The contested projects are estimated to be worth about R47-billion and took place during 2006 and 2010. Of these, R19-billion were private sector projects and R28-billion were public sector projects. Three firms – Group 5, Construction ID and Power Construction – have not accepted the settlement deal and face prosecution.

The commission's settlement agreement with the 15 companies has been tabled at the Competition Tribunal. It will hold public hearings before confirming the settlement agreement. 

Several of the construction companies have been contracted by government as part of a multi-year infrastructure project worth R4-trillion. When asked whether these companies would continue to be used by government while criminal and civil legal processes were still being considered, Patel said that one of the key gains from the fast-track settlement process was that the cartels had been dismantled and the instruments of the cartels have been identified.

He thought that the companies had been sufficiently "scared" by the intervention of the commission and that the government did not foresee any further collusive behaviour from them. It would therefore continue to make use of their services while the legal proceedings went on.

Chief executives and boards, whether ignorant at the time, now know what had occurred, he said. He added that government was in the process of re-evaluating its tender processes.